DislikedGood evening Strat!Today,you named 78.6 fib level and you call it a "critical" level.You said that the price find S at 78.6% so the price keeps the direction.So is 78.6% a maximum limit till where the price could retreace? Ex:up trend-price retreaces till 78.6% fib ,where is the last level where the price could make a HL,if the price goes through 78.6%,could reach 100%>no more HL>no more up trend.Could you please explain more?Thanks.
P.S. Sorry for my "lagging" english and black background. (igmal)...Ignored
I may be oversimplifying this somewhat but I'm trying to get a basic concept I can work with to start.
Speaking about the long term trend, on the chart here of USDJPY the move down from A to B would be considered an impulse wave and the move from B to C is a corrective wave at this point in time, correct?
So the long term trend is still down until there is break through the fib 78.6 to the upside? And the trend would be considered to be up after that (about 98.00 on this chart.)
Again, referring to the long term trend, until that level is breached the move from B to C would still be considered a retracement in a downtrend, and if that's the case any long positions in the last three months would be countertrend trading with respect to the long term downtrend. Looking at it that way, taking a long position is the higher risk play unless someone is trying to get an earlier entry to a possible trend change, etc.
However, looking at it from a short term perspective, trading can still be profitable by looking for long entries during this retracement if you are trading PASR from one SR level to the next until the downtrend resumes (if it does resume) because it can be considered a short term uptrend until then. Of course you do need to be aware that the long term trend can resume at any time until the fib 78.6 is broken, so you wouldn't want to hold a position for much time.
After the 78.6 has been passed then the odds increase for an opportunity to take a position that might allow you to ride an extended bull trend.
Am I explaining this properly and have good understanding or am I missing something completely?