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Using Fibonacci numbers to find resistance/support areas

COMEX:GC2!   GOLD FUTURES
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Fibonacci was a mathematician that developed a sequence of numbers. A number in this sequence is the sum of the previous two numbers: 0 1 1 2 3 5 8 and so on. Using some complicated math, ratios can be derived. As it turns out, these ratios are found in the solar cycles of planetary movement. According to Elliott , they are also common retracement levels in the market. Two common tools in most charting packages are Fibonacci retracement and extension tools. The retracement tool is used to predict resistance/support levels. The extension tool is used to predict how far the current motive wave might move.

In this chart, I have tracked a first (1) motive wave down in a larger degree bearish price movement. To use the fib retracement tool, I've select the origin of wave (1) and the end of wave (1), indicated by black lines. The resulting chart shows the fib levels, indicated by red lines and one light blue line. I've also included the previous BLACK 4th wave high as a blue horizontal line. According to Elliott , the previous 4th wave is a common retracement level. The gold             line is a 200 MA, which can also become an area of resistance.

The first area of resistance is .382 fib level. The next is 0.5 which seems attractive to me since the previous 4th wave high lines up at that level. Elliott has observed 0.618 to be another common retracement level.

I always have an alternate Elliott count so that I dont become married to an idea. I see a possible flat formation where the GREEN "2" wave has not yet completed. If the price moves to 0.764, I will start seriously considering my alternate count. If the price moves past the origin of the red (1) wave, the primary count becomes invalid as a 1st wave cannot retrace past it's origin, according to Elliott . It will be interesting to see how this plays out...
Your count seems correct, I tried Long
Realisto_FX
Thanks for the chart :) I used Heiken Ashi bars above. The two recent green bars show no lower shadow indicating strong uptrend. I choose short on this idea but truthfully I wish I choose neutral - i dont actually like to suggest directions to anyone. I take fib levels as a way of saying: "Let the market come into range first, then apply whatever system of triggers and confirmations one uses."
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