Fibonacci
Retracements
If I think
that my stock is going to go down, then my Fibonacci Zero should be on the top and
100 on bottom
So my
extensions, everything above 100 should
be pointing downwards
If I think
that my stock is going to go up, then my Fibonacci Zero should be on the bottom
and 100 on top
So my
extensions, everything above 100 should
be pointing upwards
90% of the failure
occurs between 78.6% and 88.6%. You should buy at this point
A swing
high occurs when the current high has lower high both before and after it
Swing low occurs when the
current low has a higher low both before or after it
So question
arises what if there are multiple lows or highs relative close to the same
price due to price consolidation range?
Answer: for
swing lows, if the lows are relatively close in price, use the low furthest to
the right in the consolidation area.
: for swing
highs, if the highs are relatively close in price, use the high furthest to the
right in the consolidation area
When we are
calculating support levels, there is only one swing high and multiple swing
lows
In Fig.1.1, For support levels, Lets say x=$10, A=$30. So the range is A-X=30-10=$20.
Lets multiply the range by Fibonacci ratios
Ratios Point
0.382 $7.64
0.5 $10
0.618 $12.36
0.786 $15.72
Take the number points by each ratio and subtract it from A( $30)
Ratios Point Pt. A Fibonacci Retracement
0.382 $7.64 $30 $22.36
0.5 $10 $30 $20
0.618 $12.36 $30 $17.64
0.786 $15.72 $30 $14.28
In Fig.1.2, For Resistance levels, Lets say x=$30, A=$10. So the range is X-A=30-10=$20.
Lets multiply the range by Fibonacci ratios
Ratios Point
0.382 $7.64
0.5 $10
0.618 $12.36
0.786 $15.72
Take the number points by each ratio and add it to A( $20)
Ratios Point Pt. A Fibonacci Retracement
0.382 $7.64 $10 $17.64
0.5 $10 $10 $20
0.618 $12.36 $10 $22.36
0.786 $15.72 $10 $25.72
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