Disliked{quote} Hi there and welcome to Expo's quality WW thread! It has been said that people don't trade the markets; they trade their beliefs about the markets. So first you have to ask yourself if you believe that Fib numbers have any use in the markets. If you do then you can probably trade them, but ask yourself why do you believe in them. I know that Expo, or Kurt, among many others believe in these % extensions (that for some reason get labeled as Fibos but I'm not sure what the numbers actually have to do with Fibonacci sequence!- if they do then...Ignored
The extensions come from the true retracement levels that are derived from the actual fibonacci number sequence.
Here's a copy and past from this pdf: http://www.forex.com/uk/pdf/Fibonacci-guide.pdf
Maybe of some interest to others, just thought I'd post it here.
If you use the legitimate retracement levels derived form the # sequence: .236, .382, .618. and you come up with the default meta4 extension levels.
1/.236 = 4.23
1/.382 = 2.61
1/.618 = 1.61
The rest are derived from the added levels thru squaring , etc etc. There are entire books written on the subject but not really something we need to get into for our purposes.
Anyways, more importantly, as you stated, we need to be looking left to see the previous S/R. My love affair with fibos/extensions comes when multiple levels match up with those previous S/R levels.
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I believe that human behavior is at the root of price action. How and why that behavior is shaped could come from a myriad of reasons from technicals, to fundamentals, to order flow, to insider trading, to HFTs, to reasons beyond the scope of our knowledge. For me, if Fibo spirals can exactly model physical nature, then it's my belief that Fibo levels can model traders behavior (to some extent). Anyways, probably beyond the scope of this thread, just rambling on. I suppose there are Fibomaniacs and then there are anti-Fibites, lol.
I'll try to give an example here in a little while when I get a moment.
Pride always comes before destruction.... -Proverbs 16:18
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