**We will talk only about a downward thrust, but all the same stuff could be used for any up thrust as well. The first task for you is - mark X, A points and levels here:**

*Commander in Pips:*

**Well, this is simple:**

*Pipruit:*

**Very good, but why you take “X” point at 1.4250?**

*Commander in Pips:***Because in the rule of estimation of swing high in previous part you’ve said –**

*Pipruit:**“we will treat as*

**swing high**a candlestick/bar that has at least two lower highs on both sides of itself – from left and from right.”**That’s correct. I like that you’ve remembered that, but why is this point does not suitable for you as X?**

*Commander in Pips:***Well, because we’ve said, that in down thrust “X” point should be the highest level and “A” will always be the lowest one and it has to stand**

Pipruit:Pipruit:

**later in time than X point – be to the right side from X on the chart.…**

**You’re wrong…partially. You’ve said all correct about “A” point – it indeed will always be the lowest price in a down thrust. But you’re absolutely wrong about X-point. I never told that it should be the highest level – read carefully again: …**

*Commander in Pips:*

**swing high**a candlestick/bar that has at least two lower highs on both sides of itself – from left and from right**You’re right, Commander, so which one is correct?**

*Pipruit:***Both. But to understand why it so important, lets use for the moment just the major levels – 0.382 and 0.618. Now I ask you to draw Fibonacci retracement as from yours X point as from mine one and let’s see what will occur…**

*Commander in Pips:***And what level should I use as A point?**

*Pipruit:***Since, as we’ve said A-point should be the lowest one - there couldn’t be two lowest levels. It means that A point will be the same for both X points. Let’s name them “Xp” (X Pipruit) and “Xc” (X Commander).**

*Commander in Pips:***Ok, I’m done:**

*Pipruit:*

**Let’s see… Hm, looks nice, I also add just a single notification for you, to avoid some confusion about A point. So, what do you see here, something special…?**

*Commander in Pips:***Well, I see that 0.618 level from your Xc point and 0.382 from mine Xp almost coincide at the same level.**

*Pipruit:***Right. This method was invented by Joe DiNapoli and he calls such coincidence as “Confluence area”. In our case this is Confluence resistance, but if it will build from up thrust, then it will be Confluence support.**

*Commander in Pips:***And why is it so big deal about it?**

*Pipruit:***Because it creates an area that is much stronger than just a single level.**

*Commander in Pips:***And could Confluence be created by, say, matching of 0.382-0.382 levels, 0.382-0.50, 0.618-0.5 and others combinations from different X points?**

*Pipruit:***Well, Confluence definitely could not appear from the same levels – such as 0.382-0.382, or 0.5- 0.5 etc… Although I suspect, that Confluence of 0.5-0.786 levels could create stronger support that single level, DiNapoli does not clarify any other combinations as Confluence – only 0.382-0.618 combination is treated as Confluence.**

*Commander in Pips:***And how close 0.382 and 0.618 level have to be to each other? Do they have to match pips to pips?**

*Pipruit:***Well they could, but this is very rare case. They should be with relatively tight difference to each other. But this will depend on time frame – what will be tight in terms of monthly time frame – could be very wide in terms on 60-min time frame. So here is example of Confluence support now:**

*Commander in Pips:*

*Chart #1 EUR/USD daily – Confluence support has been broken by price action*

**Cool. But Commander, here I see at least two more potential points that could be used as X… Is it normal? How many X points could be at all?**

*Pipruit:*

**You’re right. But if we will draw all levels from our 4 X points, this will be very messy picture. I will draw them with applying Joe DiNapoli software, that allows clearly see all X point and levels:**

*Commander in Pips:*

*Chart #2 0.382 and 0.618 Fibonacci levels by DiNapoli software markings (DiNapoli Levels)*

**Commander – you’ve scared me. Very-very much!**

*Pipruit:***And this is just a half of the thrust! But it does not mean that you always have to draw all levels.**

*Commander in Pips:***So, how we should apply it then?**

*Pipruit:***You don’t need all the levels at once. You should take into consideration only those that could impact your potential trade. But you have to start from monthly or even quarterly chart, just to understand where you are in a big picture and could any high time frame Fibonacci levels influence on your potential position.**

*Commander in Pips:***I see.**

*Pipruit:***Now let’s continue further. Here we will study some theoretical examples that will help you clearly understand how to correctly obtain advanced Fibonacci retracement levels. Show me X and A points here:**

*Commander in Pips:***Hm, it doesn’t look difficult – almost the same, just in other way. Well, the first X2 point will be the initial low – that’s obvious, the second X1 point will be a bit higher. “A” point should be the highest price to the right from X2 and X1 – this should be the highest price of this pattern. Well, I think it will look as follows:**

*Pipruit:*

**That’s right, and now here:**

*Commander in Pips:*

**Well, X point will be initial low again. “A” should be highest point to the right. The most recent price is lower than previous high, so, this is not the “A” point for our “X”. I think something like that:**

*Pipruit:*

And the last one here –

Also take a note, that the

**Well, your answer is correct, but not fully. Here is the correct answer, and you tell me, why is it correct:***Commander in Pips:*

**Well, I don’t know, it looks difficult**

*Pipruit:***Ok, I’ll help you a bit. First of all, I suppose that it’s all clear about your X and A points, right? So, tell me why I’ve marked X’ point and not X1***Commander in Pips:***Well, because we have to have the same “A” point to mark X’s as X1, X2 and etc. They have to link with the same “A” point. But here A point stands to the left from X’, so it’s not correct (it should be the highest price to the right, i.e. later in time) and “A” point couldn’t be used for building retracement. But still, X’ point corresponds with conditions – “**

*Pipruit:**…*

**swing low**a candlestick/bar that has at least two higher lows on both sides of itself – from left and from right**Definitely. So, as we have X’ point, we should have an “A” point for it also…***Commander in Pips:***Right, and the only point that is suitable for it is A’. I think I understand it. So, we have two different swings here – X-A, and X’-A’. If we assume that this is daily time frame, then, I probably will use X’-A’ if I’m intraday trader…**

*Pipruit:***You understand right.***Commander in Pips:***But Commander, and if after some time price will move higher, and A’ move above A?**

*Pipruit:***Well, in this case for both X points there will be only single highest “A” point, that will stand to the right from them and we will return to situation, that we’ve just discussed:***Commander in Pips:*

**Cool! And do you have some more tasks with that?**

*Pipruit:***As you wish:***Commander in Pips:*

**Well, I see the same swing X-A, that we’ve already discussed and some downside move. Well, if we will treat it as downswing, then we will get the following picture:**

*Pipruit:*

**And why is A and X’2 at top?***Commander in Pips:***Well, A is A-point for X – initial swing up. And X’2 is first X point for swing down X’-A’. X’1 is the second point. It comes that previous A-point could simultaneously be an initial X point for smaller down thrust. At least all these markings correspond to the rules that you’ve given…**

*Pipruit:***Don’t be afraid - you‘ve done well. I suppose these will be the last ones:**

*Commander in Pips:*

**Ok, let’s see:**

*Pipruit:*

**Very well, but don’t you see something, say, “unnatural” in these markings? Although you’ve marked them correctly, there are some needless things. Personally, I’ve marked them as follows:**

*Commander in Pips:*

**Hm, I see that you’ve just erased some markings, so you do not take these swings into account?**

*Pipruit:***Absolutely, because all retracement levels that could be obtained from them, have been already broken by price action. Look – on the left picture – I’ve erased X’1-A’ swing, because X’’-A’’ move totally broke all possible levels of X’1-A’. So the same with the right picture – X2-A swing totally erased all possible levels from X’2-A’ swing. So what for overload our chart with needless details? We should look only at those swings levels from which are still valid and could influence at our potential position. For instance, take a look at left picture again – I’ve remained intact X’-A’. Why?**

*Commander in Pips:***May be because A’’ point is a bit lower than X’ and some deep retracement levels 0.786 or 0.886 from X’-A’ swing are still valid and could lead to resistance?**

*Pipruit:***Definitely.**

*Commander in Pips:*And the last one here –

**there could be hidden “X” points**that are not correspond with our rule. But, nevertheless, they should be applied. With details you can read about it in DiNapoli’s book. Here we can only say that they are low or high of the thrusting bar (or some thrusting move) and gaps.

Also take a note, that the

**importance of different “X” points will be also different**. The “X” points of thrusting moves are more important, than “X” points from consolidations. The more important the “X” point – the stronger Fibonacci levels obtained from it.

Hi Sieve

Cant praise you enough for the excellent Forex course. May I raise two questions please

In Chapter 10Part 3 chart 1 eur/usd daily

Point X2 does not appear to have 2higher lows on the left side Why is this shown as a swing low X point.

Point X1 shows lower highs on 2 bars at each side of swing low X1 could you explain this please.

in the next chapter chapter 10 Part 3 using Joe Dinapolis software the third point is marked as 1.3523/1000 X2 should this be X3 or have i missed something

I am mindful of the hard work you have put into this course and do not wish to find fault in the event of an error, but merely wish to be sure I have understood thew material correctly. I think your brilliant top notch.