I considered following the break from the 4 month consolidation a new move, a new bull run. Fibs were used to get to that consolidation zone and reached their D targets. D targets were reached all the way up. My A point of 0.092 being the low prior to the breakout was used in a couple fibs at the time with the B point charging as we went higher, with the largest one eventually being B at 0.495. You want to apply a fib to a specific move, not necessarily to a run without retraces.
A retracement will allow you to find C and provide target D. This is one of the main reasons why the order of the labels matters, for target acquisition. If a C of 38.2 gives a D1 target of 138.2 (then in your case you will need to remember that it will be a C of 61.8 gives 138.2,) and if a C of 50 or 61.8 gives a D of 161.8(then in your case it will be 50 or 38.2 will target 161.8). It is simpler to track imo to use "from the high" instead of "of the high" when doing D targets. From here on, I will only be using and referencing labels from the high (how they appear on mine)
As we retraced to 50%, the D1 was 161.8% not 138.2%. In the case of a 50 or 61.8 retrace, the 138.2 does not become a target, just a resistance level. 138.2 is only a D target for a 38.2% retrace from the top. This is why on the MSCI inclusion, 0.745 became the target as D1 at 161.8%. Even in the case of your little fib in between the two peaks of price, you wouldn't have a D1 target at 0.61 as the 50% takes us to 161.8 (dark blue 0.67 on yours)
I have found it best not to have fibs of approximately the same size that overlap, so this generally means on a key retracement your C point with a target D1 would not also be a new A and B. Smaller fibs inside larger Fibs work well however, because you are looking at different time scales and smaller runs. Always good to check whether the bottom of a retracement is actually ab A or C.
I have done some analysis recently on DRE thread when it broke out of the year long range (the breakout should give you an approximate timeline of the post date) that had a fib in a fib. We hit the smaller D1 and should tagging the larger D1 in the next couple of sessions imo. It's a good example of fibs working together, and fibs in fibs if you want to see one in action. I separate different fibs with different colours to make it easier to know which is which.
I never use the extension tool. And just to be really confusing on some platforms I need set negative levels for my retracement to have them on one fib (-1.382 = 138.2%, -1.618 = 161.8%, -4.236 = 423.6 etc) but on my current one I can't do negatives so the only way I can get accurate extension and fibs for the way I use them is to draw a second fib upside down with positive levels and hide anything 100% and under. Ultimately, whatever way you draw them, if you want to learn high probability price targets for a move from using fibs its easier to use them in the order shown, imo.
Best to validate fibs on larger time closes and small time wicks. Because closes are more important fib levels are often where bulls and bears battle strongest and so close on or very close to a key level. Small time frame wicks on the other hand are usually spikes from profit taking or dumped orders from tagging the fib level first or second time.
Thats enough from me on fibs for now. Enjoy
(20min delay)
