The blue bubbles and the blue trend line is indicating the fib retracement tool.
The red bubbles and the red lines are showing how to use the fib extension tool onto the chart.
The pink lines on the chart are indicating the abcd pattern tool.
PLEASE NOTE THAT THE 1.618% EXTENSION IS THE MORE CONSERVATIVE APPROACH WHEN TRYING TO FIND AN AREA WHERE PRICE MAY EXTEND TO.
The 1.618% is a fib level found from the fib extension tool.
THE 161.8% IS THE MORE AGGRESSIVE APPROACH WHEN TRYING TO FIND AN AREA WHERE PRICE MAY EXTEND TO.
The 161.8% is a fib level from the fib retracement tool.
What is the purpose of combining them?
The answer is to enter the trade off of the fib retracement tool. Exiting out of the trade off of the Fib extension tool. When combining these tools this is considered fib ratio trading.
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Comments
lawcch
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In actual fact, the way we perform the Fibonacci on any platform is wrong , for identifying retracement level (to reflect actual internal market or micro S&R level) we should use the recent Swing High drag the point to the previous Swing Low to get all the key Fib. ration like 0.382, 0.5, 0.618, 0.786, 0.886. If you want to learn more advance Fibonacci tools techniques, please read book by Constance Brown "Fibonacci Analysis" and "Technical Analysis for the Trading Professional, Second Edition: Strategies and Techniques for Today’s Turbulent Global Financial Markets." These reading materials for hose person who want to take CMT Level 3 exam and very advance stuff and technical.
tradingformoney
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thanks man, yea the best way to learn how to trade is from the cmt. vs buying education from someone, an they really need to make it a mandatory law that if your going to solicit education you need to be a cmt. That would get rid of have of the crap that is out there that is full of b,s.
do they have anything over the ichimoku in the cmt?
lawcch
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no specific topic for Ichimoku strategy in CMT exam. but it is good for general knowledge. Many good traders do not have CMT certification but they still make tonne of money. Those with CMT certificate work for institutional invesment firms, bankers, hedge fund or mutual fund managers, etc.
lawcch
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you may also like Carolyn Boroden on her website (fibonacciqueen.com/public/main.cfm) and her teaching Fibonacci tools but sometime like Fibonacci Timing tools and other symmetry setup and zigzag setup trade. Pretty useful stuff and I learned most from her teaching.