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I see many traders split fib retracements ad infinitum. I like simple things so
I stick with just two: .382 and .618. If I enter against the retracement on a
.382, I'm out or revesed upon hitting .618. When .618 fails to hold, I consider
a confirmed trend reversal to have taken place until such time as it fails to
take out the base pivot. If the base pivot holds, I will reverse away from the
retracement and look for a minum price move equal to the distance between the
base pivot and the pivot at which the retracement began. If that fails, I have a
double confirmed failure and it's time to trade in the direction of the
retracement.
Earl
-----Original Message-----
From: Donald Thompson <detomps@xxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Tuesday, May 05, 1998 10:47 AM
Subject: Re: retracement levels
>Tullman, Mitch wrote:
>>
>> JamesinLA wrote: Mitch,
>> > I just started using fibonacci retracements as filters and as an
>> > indicator.
>> > I've set up three support areas: 33%, 50%, and .618. Are those the
>> > correct
>> > numbers? Thanks.
>> > Jim
>>
>> Yes ...those are correct. You can also use .79. If price breaks .79
>> retrace...get out.
>>
>> Also If price fails to make even the .382 retrace...this tells you trend
>> is super strong....get on board in direction
>> of trend
>>
>> good luck, Mitch
>
>Not to obscure the issue, but at the low of last week. there were
>several .786 retracements.
>Either in the SPX or Futures. They are that close, and then reversal...
>So going > .79 is probably a good rule of thumb. .786 is square root of
>.618.
>
>Don
>
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