I’ve been using Fib like the title suggests.
However, I’ve also seen the minor high or low, just prior to breakout, working as the first point as well.
is the answer to align which ever fits with the specific R/S of that scenario?
picture provided represents everything …
Yes, you could form-fit fib levels any way you want. Which brings me to an important point: Fib levels typically have to be form-fitted to price action, which begs the question, why use the indicator at all? Particularly the way you are attempting to use it here.
First, without seeing the price action prior to this screenshot, I have to assume the price is consolidating, evidenced by the converging trendlines. Trying to predict the breakout using fib extensions would not be ideal since it could happen at any point. In other words, the institutions driving the price action don’t really care where price is on the chart. It’s determined by economic forces that you and I cannot reasonably predict, no matter how many indicators we use.
That said, the way I would trade this is to take my market order long now, with a stop below the double bottom. My profit target would be between the 38.2% pullback (169.903 price level) and the 50% pullback area (170.147). Incidentally, this area is where consolidation traders like myself expect to find equilibrium, at least in the short term.
I may even get a 1:2 RR if I am fortunate. A scalp, for sure.
"Yes, you could form-fit fib levels any way you want. Which brings me to an important point: Fib levels typically have to be form-fitted to price action, which begs the question, why use the indicator at all? Particularly the way you are attempting to use it here."
If fib levels TYPICALLY have to be form fitted, then what’s wrong with form fitting a fib and why wouldn’t I use it?
"First, without seeing the price action prior to this screenshot, I have to assume the price is consolidating, evidenced by the converging trendlines. Trying to predict the breakout using fib extensions would not be ideal since it could happen at any point. In other words, the institutions driving the price action don’t really care where price is on the chart. It’s determined by economic forces that you and I cannot reasonably predict, no matter how many indicators we use."
There are fib extensions and fib retracements. neither predict when breakouts occur.
"That said, the way I would trade this is to take my market order long now, with a stop below the double bottom. My profit target would be between the 38.2% pullback (169.903 price level) and the 50% pullback area (170.147). Incidentally, this area is where consolidation traders like myself expect to find equilibrium, at least in the short term."
I use fib retracements just like you are using it here. Using it as a potential price target. It seems I gave you the wrong impression which resulted in your first 2 paragraphs not making much sense to me.
To make a fib retracement go from high to low or vis versa. this is the typical way of making a fib.
However, I’ve noticed the minor S/R prior to breakout acting as a fib also. I’m talking about that point between the 618 and 786 that goes up to touch SMA, do you see it? Using that point as the high in this situation.
I think the answer is to be conservative. if the new fib is closer to price then its more conservative, and if price going there makes you what you want to make then use it.