AB must close below the 61.8 Fib level (usually closer to 50)
CD represents deep retracement of XA – Usually 88.6% (sometimes even 100% – Double top or double bottom).
BC is usually a deep retracement of AB (61.8, 78.6, 88.6 or 100)
CD size is bigger than AB.
The Entry Zone (or the PRZ – Potential Reversal Zone) starts at the 88.6 Fibonacci level (D point) and remains valid as long as the price stays above (or below) A.
Once the price enters the Entry Zone, the key is to find technical reasons that will reinforce the potential reversal scenario. Classical reversal patterns in lower time frames, candlesticks patterns or any other technical tool can be used to try and spot the potential reversal inside the Entry Zone.
Once the price turned inside the Entry Zone the focus moves to the potential Target Zones:
First Target Zone – 38.2% Fibonacci retracement of A to D
Secondary Target Zone – 61.8 Fibonacci retracement of A to D
CD represents deep retracement of XA – Usually 88.6% (sometimes even 100% – Double top or double bottom).
BC is usually a deep retracement of AB (61.8, 78.6, 88.6 or 100)
CD size is bigger than AB.
The Entry Zone (or the PRZ – Potential Reversal Zone) starts at the 88.6 Fibonacci level (D point) and remains valid as long as the price stays above (or below) A.
Once the price enters the Entry Zone, the key is to find technical reasons that will reinforce the potential reversal scenario. Classical reversal patterns in lower time frames, candlesticks patterns or any other technical tool can be used to try and spot the potential reversal inside the Entry Zone.
Once the price turned inside the Entry Zone the focus moves to the potential Target Zones:
First Target Zone – 38.2% Fibonacci retracement of A to D
Secondary Target Zone – 61.8 Fibonacci retracement of A to D