Disliked{quote} I have been looking at how you use the fibos to set targets. As I mentioned previously it looks very similar to how walvekarraje does it. Could you give me an idea of what your typical target size in pips is on H4?Ignored
Method 1 - Measuring the Impulse Wave
The standard way would be to draw the fib from the start of the impulse wave at point A at 100% to point B at 0%. Point C would be your retracement. This retracement could coincide with whatever confluence of your liking. S/R, Imbalance, Divergence, Trendline Bounce, Trendline Break. The extra sauce is up to you.
Projected targets (measuring from the 50% retracement)
- -27.2% - 62 pips
- -38.2% - 72 pips
- -61.8% - 94 pips
- -100% - 125 pips (aka full extension)
Method 2 - Measuring the Retracement
This is a more conservative TP approach. Instead of measuring the impulse wave, you measure the correction wave from B at 0% to C at 100% and use fib extensions as targets.
I normally target these 2 fib extensions. Assume we enter at 50% at point C.
- 138.2% - 60 pips
- 161.8% - 72 pips
These are more conservative targets and you're working under the assumption that point C will hold as a swing point. More interestingly, you will see price tend to stall at 138.2% and 161.8%. Of course, that's not always the case, but if you draw these fibs, you'll notice price will very often go to these levels to the pip. On multiple time-frames. There's nothing magical about this. I think they are just very common projection targets.
There's nothing fancy about using fibs. They're really just a simple percentages to measure retracements and projections. The underlying concepts are your basic 123 and ABCD patterns. Nothing ground breaking. 8/20 ema serves as a trend filter. You use fibs to set entries, stoplosses and targets.
A simple positive R:R system
- Price is trending as shown by 8/20 ema cross over.
- Measure a strong impulse wave.
- Set limit order at 61.8%
- SL at 100%
- TP at -38.2%
- This will always result in a more than 1:2 RR as long as you trade bigger timeframe
You can improve on this with candlestick patterns, confluences, etc. The problem here is that strong trends don't tend to retrace to 61.8%. They tend to be shallower at the 38.2%, sometimes not even. And you would need to target further fib extensions in order to yield a positive R:R.
But the concept is simple. Trends and pullbacks.
Leave the Gun, Take the Armani
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