question about drawing fibs

When market makes a new low, do we draw the fib connecting it from the previous high to the new low
And when market makes a new high, we draw a fib from the previous low to the new high?
I have attached a picture is this correct?

Jotty, your fibs look good. Dont forget to look at the extensions. They are good targets. For instance, if price does a 61 retrace a good target would be a 161 ext. I've drawn one on your same chart but it is a 70.7 retrace with a 141 ext. Could Pretty spot on. Fibs are cool. You just got to keep drawing them till something makes sense to you. Hope this helps. Below are the reciprocals (extenstions or targets).

38.2 / 2.24 or 2.618
50 / 2.0
61.8 / 1.618
70.7 / 1.41
78.6 / 1.27
88.6 / 1.13

There are many ways to draw fib levels but in this case you would not draw the second fib until price acheived a higher high then your previous high. You would then connect your most recent low to your new high.

How to draw fibo extension in MT4? I can not put 2 points on the chart?

Click the fibo button, and draw a line from top to bottom or v.v. (i.e. click and hold left mousebutton at startpoint, release on endpoint)

Ça c'est simple comme toujours...

Fibs retracements are exactly that: levels of retraces according to the number PI. So, by definition, a retracement is the pull back section of a swing, and as such it must be drawed in the direction of the major trend.

So, to cut it short: if the trendline points upward, draw the fib from the swing's low to high, and viceversa.

PS: I dont pay much attention to fibs extensions as price targets myself, but I definitely swear by fib retracement levels' value.

Phil, I think you may be getting the fib tools mixed up. There are 2 fib tools that i use with mt4. 1) the fib retracement tool ( i use for fib retracements and extensions) 2) the fib extention tool ( i use this for ab=cd). I think you may be using this to try and draw extensions. For the fib retracement tool I had to add the fib retracement levels that i posted above and there reciprocals. I also had to modify my fib extension tool with the labels ab=cd etc.

Jotty, couple of other things about fibs and there patterns. They for sure dont work all of the time. But what i like about them is they give you an edge to lower your stop losses and increase your r to r. Fibs should be drawn both ways in order to find a confluence area, ie extensions lining up with retracements. All i can say to you just have to keep drawing them till something makes sense.

WTB, I agree you should always trade with the trend, but why not use the fib extension to confirm a retracement fib? A confluence or cluster of fibs.

Food for thought,

David

Same chart using the fib extension tool. I use this tool to find ab=cd's. I have 127 ab=cd and 161.8 ab=cd on there to help look for patterns. You usually have to readjust the retracement spot. To do that go to charts , objects, objsect lists, then edit, parameters, then i simply changed the bottom value to 7412 to match the high (or low if your drawing the other way). And then under fibo levels i simply just edited the extensions. Hope i didnt confuse you. Just an easy way of drawing ab=cd's.

Can anyone explain whats the difference between fib extension and fib retracement?
I think so far what i have been using is only fib retracement.
Would love to know how to use fib extension to find confluence
thanks alot

ab=cd at a 61.8 fib. 1 hour euro chart. Fib retracement tool and fib extenstion tool used.

Oh boy.