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Timing Solutions for Swing Traders: A Novel Approach to Successful Trading Using Technical Analysis and Financial Astrology by Peter Tryde, Robert Lee

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FIBONACCI RETRACEMENT AND PROJECTION

Support and resistance lines and projection lines are areas where prices are expected to meet probable buying support or selling pressure. At these crucial points, a continuing trend may come to either a temporary consolidation or a trend reversal.

In the MetaStock program, there are two utilities, Fibonacci Retracement and Fibonacci Projection, which can be very useful in identifying the levels of various movements of waves. Fibonacci Retracement will display a series of horizontal lines relative to the selected trough and peak of a trend line. You can add or remove levels as you wish. The horizontal lines will be useful to mark the likely retracement or rebound points. After a significant move, prices will often rebound or retrace to ratios of the original move at or near the Fibonacci Retracement levels, such as 23.6 percent, 38.2 percent, 50.0 percent, 61.8 percent, 78.6 percent, and so forth. Fibonacci Price Projection is very popular among traders, particularly those who practice Elliott Wave Theory. Generally, the 50 percent level tends to generate a field of gravity around it. After a long trend, price seems to easily retrace or rebound to the 50 percent level. It is a number that is worth remembering in trading.

Fibonacci Retracement is used to calculate the probable support or resistance areas of the current wave swing relative to its preceding swing. An example of calculating Wave B is to determine the Fibonacci Retracement Ratios ...

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