Maybe I'm reading the wrong stuff or it's too complex for my brain, but I can't find a definitive answer for this question:
When putting fibs on a chart, how far back do you go and why? If I'm using 30 min charts do I go back 5 days? 10? 15? If someone could once and for all explain a method/rule/rule of thumb I would be truly grateful.
Thanks very much.
Every one has either a similar question, or found a unique answer that works for them.
Regardless of where you anchor the start & end-point of the reference swing, your next question is - which level do I look at? Classic levels are the obvious 38.2%, 50%, 61.8%. Then come some less obvious ones, 24.6% & its opposite 76.4% which are true fib ratios, but often replaced by 78.6% (sqrt(61.8%)) & its opposite, 21.4%. Another popular one is 70.7% (sqrt(50%)). The "rationale" behind using those sqrt() values comes from 38.2% being sqrt(61.8%).
One level you'll hardly ever hear of, is 30.9% ... which is 61.8% of 50%. Take a CL chart, this ratio is "everywhere" (well, when CL pulls-back). It's opposite 69.1% is also interesting (and close to 70.7%).
Another level which plays a "last resort" role, is 88.7% (sqrt(78.6%).
So, what do you with all these levels? This is where you start using as many intermediate points as you can in the last major swing, to draw not one but several fib scales (all ending at the same point, but starting from different key S/R levels in that major swing), and look for confluence of levels between those fib scales.
Those levels are the ones which "should" gather the most interest from the different market participants.
To be honest, there will always be a fib level of some sort which will show a decent bounce (if not the deepest point of the pullback). Correctly anticipating which level it is, is usually the million dollar question.
