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TTWSX102: 1 of 2
The term Retracement originates for me in the book ‘Elliott Wave Principle : Key to Market Behavior' by Frost and Prechter, so I suggest you ask your library if it has a copy and study the contents.
The fibonacci levels tool originates from Elliott's work and is one of the single most reliable tools for targeting price Retracements, Corrections and Projections.
The 60 min chart is the Primary 'yardstick' for price movement analysis; for Day-to-Days traders it breaks Waves on the Daily chart into more discernable information. Fibonacci levels drawn on the 60 are easily transferable to timeframes down to the 1 min chart for Intrahour/minute traders, as well of course as drawing fibo levels on any chart used for trading. As can be seen on the chart the first Green fibo drawn during the week of Sep 17 has remained useful since it was drawn.
The application of the fibo tool is a matter of experience, and as can be seen, it's very important for the Close to be identifiable on price bars (via Moving Average, Simple 1)since it can be the Close rather than the HH or LL that's the significant point that 'hits' the fibo level and ends that price movement or is used as a drawing point for the fibo.
Understanding price movement in terms of the Elliott Wave Principle and being able to count Waves — with your frame of reference — means understanding what the price is doing, a Retracement or Impulse Wave.
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