Hello. I need this clearned up once and for all because I’m not confident that I’m drawing my fibs right. First of all, should you pick the most recent swing high and low? What I mean is, I know that for the later swing (the swing you choose that is to the right most on the chart, or the later candle) should be as recent as possible, but for the other swing, should you choose the most recent or should you go with the most recent swing that is SIGNIFICANT? So if for example, I pull back to a swing high, but less than 1 hour before (on 15m chart) there is a higher swing high, should I pull back to that swing or the more recent one?
Also, If I see a swing that looks more like a double top or a bottom is it valid? Sometimes a candle may be only a pip or 2 higher or lower than the next, and it may look more like a double top or bottom than a swing. Are those still usable for swings?
Lastly, does it matter if I draw from top to bottom, or from bottom to top? Do I draw them differently in an uptrend than I do for a down trend?
EDIT: If it helps, let me know if the fib should be connected from point A to point B, or from point A to point C on the chart below. From A to B would represent the “double top” example that I explained above. It also represents how a more significant swing can be chosen. Also, let me know which direction I would pull, from B to A (or C to A) or vice versa. Thanks!
Everybody draws them differently. The way you have it is pretty much how I would draw it. Having said that, I don’t really use fibs anymore. It is my opinion that they are completetly useless. The reason I feel this way is that if you picked any three numbers in a range of say…20%- 70%…and called that a “pullback” then I guarantee you can look at any chart wheter it be stock or forex, and point out these pullbacks which are supposedly following those numbers. The fib numbers themselves are only considered special because of the association with fibonacci, but I don’t see why you can’t use any numbers that are in a broad range.
I know people will talk about how I’m wrong and how 38.6, 50, and 68.2 are truly the numbers that work the best, but to that I say bullocks. 30, 42.6, 64.2 would work just as well if you are predisposed to thinking that.
But again to answer your question, the way you have it drawn would be considered a minor fib in the sense that the expected pullback would not go as far as say the move from the very top to the very bottom (since it has more distance to cover).
Draw fibs for all the swings and if you find a convergence of levels, then you can reliably assume that that level will be an important point of support/resistance.
Spread the fibs from swing highs to swing lows and vice-versa, in the pic attach you will see a few fibs on a similar eurusd 30m chart. Wait until a new low or high is formed and the market starts retrace before you spread the fibs. Fibs are used to measure retraces.
