This time how to ride the rising stock at the near bottom using Fibonacci extension and fan line. This can also explain how to attack major target levels of Fibonacci extension like 61.80, 161.80 and 261.80%. Please be noted that do not enter at 423.60% level!
See below chart and check circled spots.
The first job is drawing Fibo extensions and Fibo fan line connecting low and next low point. This is the low to low connect method. Also we can use continued price high to low connect method like fibonacci retracement. Will explain this at next posting.
Rising of stock price means going over to the upper level of Fibonacci extension. Normally the upper level will act as a resistance point. There are three ways to breaking up this level.
1) Simply going over 61.80% => Fast shutting up, so will likely go back to 61.80% or under because of no supporting. Not recommend to enter
2) Go over 61.80% with Fibo fan line => Will be OK. Continuing Fibo fan line or 61.80% level will be a base line for profit cut or loss cut.
3) Go over 61.80% with Fibo fan line and Simple Moving Average(SMA) curve => 100% success! Continuing Fibo fan line or 61.80% level will be a base line for profit cut or loss cut.
Like this, we can apply combination of Fibo indicators and SMA curve to figure out the optimal enter point. Please see three circled spots on 61.80% and 161.80% level on above chart. The end of one white candle went over upper target level and we can see SMA curve or/and Fibo fan line is placed on the white candle in a cross up or push up configuration.
When looks stock is rising from bottom, just wait. This can be a bull trap. So just wait until it will reach 61.80% level. And then checking is there any Fibo fan line or SMAs on the white candle which is ending up at the over of 61.80%. If yes, go enter and enjoy.