Below are three studies concentrating on the 50% retrace into WRCs and Fibb lines. As you can see with:
Chart 1. (FML) the range bound & up-thrust/trend areas are clearly defined. The trades I ran last week capturing those pip movements were based on this study. As you can see the confirmation was @ the 4.66%. Mostly you will find with these set-ups that the moves are not instant. So they do offer confirmation on retraces & pullbacks giving plenty of time to exit or re-enter. The second level after consolidation was 5.93% ideally I should have exited @ the top of that swing where it bounced off the previous 50% retrace, confirmation was the price closing at the 62.00% Fibb. But as I wrote last week I wasn’t too bothered with trading this as I was busy else where. My new exit strategy here now is based on the 2.92% & again if it bounces of the previous 50% with confirmation on the 62.00% Fibb.
Chart 2. (NXS) Well defined range with up-thrust/trend areas. This is offering clear buy & sell signals. Present strategy is exit @ 38.20% Fibb top left on retrace. And exit @ previous 50% retrace level on the rise. 50.00% - 38.20% Fibb would be the re-entry target on a re-trace off the previous 50% retrace level.
Chart 3. (LYC) Very interesting study in that I generally day trade this. But for our purposes it actually offers a great visual representation of the points I’m trying to make. Rectangles showing congestion zones interesting how they are sitting in Clear Air Zones (Areas with no Fibbs). Previous 50% retrace levels offering great S&R. Previous momentum trade was confirmed with the bounce of trending line & the close above the 23.60% fibb. Confirmation to close that momentum trade came with the dark cloud cover. Confirmation to re-enter either on momentum would have to be a confirmed break or retrace out of that rectangle. Confirmation of a swing would have been that re-test of that double 50% retrace (inside the rectangle).
The last picture is a photo copy of Ganns May Soy Bean trade of 1948 that he shorted and had a very successful trade with. What’s amazing is that Gann worked all that out with pencil and paper. Something that is truly incredible. Imagine what he could accomplish with today’s technology.
