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Chapter 10, Part II. Fibonacci Retracement. Page 4

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 15, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Commander in Pips: Ok, now let’s take a look at Fibonacci retracement from a down thrust. This is almost the same, so, I give you the description briefly.

    Downward thrust

    1. Since a down thrust develops from higher levels to lower levels, then the starting of the thrust, which is our “X” point” will be swing high. And “A” point will be swing low, because the down thrust ends at lower levels, which is also a final point of thrust;

    2. We use strictly high and low prices for estimating X and A points. Not open, not close not some average – strictly extremes;

    3. During a down thrust the “A” point will be always the more recent low price and it has to stand later in time than X point – to the right side from X on the chart;

    4. All retracement levels will be above the A point and stand between the X and A points – i.e. stand inside the “XA” range;

    5. To estimate any retracement level you should apply the formula: A + (X-A)*ratio;

    6. To draw the levels from a down thrust you should accomplish the following procedure:

    - Click to “X” point of the thrust;

    - Drag the mouse down to “A” point and release the button. Levels should look like those on chart #2 – the closest to “A” should be 0.382, then 0.5 etc;

    - If your levels after points 1 and 2 look opposite – the closest to “A” point is 0.886, then 0.786 etc. - some software assumes opposite procedure – you should drag mouse from A to X point. Do this, and you will get proper levels.

    7. Retracement levels from a down thrust act like resistance.

    Chart #2 EUR/USD 60-min chart. Example of Retracement levels from down thrust.

    Commander in Pips: If you wish, you may check level numbers with manual calculation. Now let’s point out some additional properties of retracement levels:
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