Tag: fibonacci retracement

Simple calculation for 61.80%

Many traders are saying that they can not use a Fibonacci extension tool on trading platform. But do not worry about because we can use any calculator to produce 61.80% value.

Below chart shows three white troops pattern and the high and the low point of each waveform continuously increase.

1st up wave : S-A-1
2nd up wave : 1-B-2
3rd up wave : 2-C-3

We will produce 61.80% of each up wave. Formulation is 61.80% = (High – Low) * 0.618 + Middle and result are like following.

And draw the 61.80% value line to the chart. Here red colored lines are 61.80%s of each wave.

Obviously, if a stock rises, it will not go down below 61.80% level of 3rd up wave. Because that point is a final support level on move up. Here 1458.

This is Amazon stock and progressing like this after three white troops formed. Today this met 1715.94/423.60% of 1st up wave.

So we are OK without Fibonacci extension function on our trading. Just use any simple calculator to find where are 61.80%s. Please apply this approach to your interesting stocks. This will help you to understand how stock form rising set up at initial phase.

If the practice of finding 61.80% continues, there will be no entry into falling stocks, nor will there be any catching up of stocks that have risen too much.
Just find where are optimal entry point using 61.80% and aggressively attack such target point!

Thanks!

Strategy for riding the rising stock at the near bottom

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.

netflix chart

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.