Fibonacci Expansion explained easy on AudCad

7 Dis 2014

When you find a trend and want in, it's important to find a good entry on a pullback(correction). When trend resumes you get paid. In first blue box we trended down 112 pips before a pullback occurred. Lets call that 100%. Yellow box is the pullback and second blue box is trend resuming after pullback. This second trend should travel same distance as first which would be 100%, but so far the 60 pips it has traveled represents 54% and Fibonacci Expansion measures this distance. So how do I capitalize on this information? Since I expect 100% to be covered I will short and expect at least 52 pips and will us Fibonacci Expansion levels to help me place my stops at higher price. In this case you can use the .236(.9544) level as resistance and location of stop making it 33 pips of risk, or .382(.9528) making it 17 pips of risk.