Chart #7 GBP/USD Weekly In fact, this is very important chart that contains almost all important rules that we’ve pointed out today. Let’s move through it from left to right: 1. First, here you can see an importance of major AB swing – look how the market reacts on all targets – 1.0; 1.272 and 1.618. Furthermore – 1.618 target with outstanding accuracy shows the reverse on top. This top is also has been confirmed by shooting star that later has become a part of evening star pattern; 2. Pay attention to the moment, how we have chosen an “A” point. This is not a swing low at 1.7046, but this is the point, from which thrust itself has started directly. This is very important – you should always use this kind of points as “A” point; 3. Here you can see, how Fib extension tool could be applied for estimation of support area. See the last ABC pattern – C point stands a bit outside of AB swing. And 1.618 extension target supports the market. This is an Agreement by the way with 0.382 Fib retracement (support) level! And here what could happen, if we use as “A” point the swing low at 1.7046: Chart #8 GBP/USD Weekly Commander in Pips: See, how such small nuance as choosing a start point of extension building could lead to serious problems. Just imagine if you hold Long position somewhere around 2.050 area and you’ve chosen “A” point as on chart #8. So, you are quite happy and intend to take a profit around 2.1342 area – 1.618 Extension target. Suddenly, market reverses down and you have a big problem, mostly because you do not understand what is happening – is it just retracement or what? And the major question is “why”. And the reason is just is in “A” point choosing… Pipruit: Commander, I even have no words currently. Here is a lot of important information, and I suppose that I will have to return to this part and read it again and again. But I have to remember that. Commander in Pips: This is wise decision, son. This material will help you much in real trading. P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer soon. Note: FPA ranks are earned in the battles against scam, not in the classroom.