Also, worth noting, the trade plan is to sell half the position at target one, moving the stoploss up to the original buy zone (break even point) and aiming at the second target for the other half of the position.
I'm not sure if my math is correct, but I think this works out to 1.5 risk/reward ratio overall ($100 risk turns into $50 profit at target 1 and another $100 profit at target 2, I'm assuming the distance from the buy point to 0.618 is the same as from 0.618 to 0.382...but I'm not sure though, haven't looked into it enough), with the added benefit of locking 1/4 of total potential profits (of shooting for target 2 with all of the position) at the first target and simultaneously removing risk once those shares sell and the stop is moved to break even. I've heard that this type of trade plan mathematically favors the trader over the long run, starting with the 1:1 risk and then trading with "free shares" from there.
Also (# 2 :) ), this pattern is supposedly 80% successful at hitting target #1. I'm not sure what the success rate is on target 2, but I'd assume that momentum indicators might help with determining whether it has a better than average chance of reaching that level or not. How price reacts to the fibs resistance might be another useful indicator.
AI
