lowtrade

[lowtrade]

If you use stock charts, you can click java chart below the standard chart, to mark up your chart. On the top you will see the FIBs retracement tool. A little box with horizontal lines. Click it. Click and hold at the start of the run and drag up to the candle body top and release.

This will give you a scale with 38%, 50% and 61% retrace levels. You see me use this all the time to determine how large the first bounce from retrace will go.

The retrace RULE of THUMB is:
If it bounces at 38%, or above, the move will pass the previous high.
If at 50% it will reach previous high.
If from 61%, expect 50%
And from below 61%, expect a pop to 38%

When using the FIBs on a flag or pennant, you can worry about breakout at 50% and stop watching below 61%. Because the rule of thumb predicts, not projects, any bounce will not pass previous high.