The Rule of Seven - Defining targets (bearish version)
Fibonacci is not the only way to define levels, there are other levels such as those by Gann or the "Rule Of 7".
It's quite simple and is based on fractions of 7 hence its name.
The coefficients between a bullish and a bearish leg are different. Here are the rules for bearish objectives. Check the related idea for the bullish version.
Pick the base (could be a key level or a support), this value is B
Look for the first pullback level or another reference level (that you would use with Fibos for example), measure distance between base and the reference, this is D
1st objective: B - H*7/5 (high probabilty)
2nd objective: B - H*7/4 (med. prob)
3rd objective: B - H*7/3 (low prob.)
4th objective: B - H*7/2 (lowest prob., needs a strong momentum)
Note the difference between bullish and bearish coefficients. Bullish are 7/4, 7/3, 7/2, 7/1 while the bearish are 7/5, 7/4, 7/3, 7/2.
Tip: you can use Fibo tool of TradingView. The coefficients are 1.4, 1.75, 2.3333 and 3.5 in the case of the short side rule. For long side, you'll use 1.75, 2.3333, 3.5 and 7.
Want to know more? you can read this: www.edwards-magee.co.../ggu/ruleofseven.pdf
French speaking traders, you may look at this: www.youtube.com/watch?v=nDxDipOF...
Thumb up if you enjoyed and learnt something.
It's quite simple and is based on fractions of 7 hence its name.
The coefficients between a bullish and a bearish leg are different. Here are the rules for bearish objectives. Check the related idea for the bullish version.
Pick the base (could be a key level or a support), this value is B
Look for the first pullback level or another reference level (that you would use with Fibos for example), measure distance between base and the reference, this is D
1st objective: B - H*7/5 (high probabilty)
2nd objective: B - H*7/4 (med. prob)
3rd objective: B - H*7/3 (low prob.)
4th objective: B - H*7/2 (lowest prob., needs a strong momentum)
Note the difference between bullish and bearish coefficients. Bullish are 7/4, 7/3, 7/2, 7/1 while the bearish are 7/5, 7/4, 7/3, 7/2.
Tip: you can use Fibo tool of TradingView. The coefficients are 1.4, 1.75, 2.3333 and 3.5 in the case of the short side rule. For long side, you'll use 1.75, 2.3333, 3.5 and 7.
Want to know more? you can read this: www.edwards-magee.co.../ggu/ruleofseven.pdf
French speaking traders, you may look at this: www.youtube.com/watch?v=nDxDipOF...
Thumb up if you enjoyed and learnt something.
