Hopefully easy fib question

Hi all -

I've read many posts about fib lines, and I am still missing something. My question this time - when drawing them, how far back in time to you go to find your starting point? For example, say I am looking at a 30m chart - I can see approx. 24 hours of candles on my screen. Now, I see a downtrend, so I connect the highest point (swing high) to the lowest point (swing low).

However, if I zoom out my graph, I see that yesterday's data shows today's downtrend is just a continuation of a larger trend - so yesterday has a higher swing high. Do I use that one? Go back a few days? Or just use what is on my screen? I am pretty confused by that.

Also, how do you use the Fib extension in MT? After drawing retracements, do I connect the swing low to the new (but lower) swing high?

Will I ever understand the almighty Fib?

I'm not a big fib user but I'll give u what I think I know. Fibs are drawn from support to resistance. All areas that this occurs is fair game for a fib regardless of timeline. Look for areas of fib confluence.
The above can get pretty messy so once u have your areas of confluence mark them and delete the rest so u can clean up your chart a bit.
The above is only my current understanding and is not neccesarily how others will use them.

If it's any help to you, personally I draw my fib lines first of all on the daily chart. Then you can work through the timeframes. Remember you can have more than one set of fibs on your chart.

Like mrgreen said, you'll begin to see where fib lines cluster - these areas will offer you a better idea of support/resistance.


Komp.

I am also trying to learn Fib but at the moment i look at where others put their Fib Retracement lines and look at why they chose those particular points. I have found that longer term Fib points are more reliable especially when the are in confluence with shorter term Fibs. I think just looking at a daily chart is too close and you are missing the big picture imho.

The Forex Factory home page shows a selection of analysts thoughts and i also use Action Forex especially the Action Insight.

Hope that helps

Lyndon