Fibonacci Retracement Levels, Additional Techniques (cont.)

Refer to the 15-Min bar chart labeled "Treasury Bond Rally US H0 and Fibonacci Techniques" [Thumbnail - Full Size ]. The measurement we will make will establish the percent retracement from a significant trough "B" to another significant trough "D" using the significant peak at "C".

Place the Fibonacci Retracement Tool low end point at the low of the "B" retracement and place the high end point at the high of the peak at "C". Notice that the retracement at "D" is just below the 50% retracement level, as shown by the blue retracement levels. After the next peak is made and price has retraced almost 50% (as measured by the % retracement from "D" to the new, as yet undefined high, and the new, as yet, undefined low), we should be considering a buy if our other indicators become positive.

Understand that this and any technique, approach, system, or trigger becomes more valid if confirmed by other non-correlated views. Trading is science and art. The art is applied by evaluating the weight of the evidence provided by the scientific approach that provides the evidence. The art is the hardest aspect for most traders to acquire and requires dedication and practice.

Notice also that the total % retracement from either new high at "A" or "C" is between 23.6% and 38.2 %. We would want the total % retracement from any new high to also begin to move higher within this range. We may accept a small move below the 38.2% level if the move below this critical level "snapped back" and immediately moved higher.

Price subsequently moves higher into February 3rd - over 3.00 points higher from our possible entry at "D". Depending on your trading time frame and price target, you may have covered part or all of your contracts on the range expansion bar into the February 3rd high.

Price moves lower into February 4th. We should now use the Fibonacci Retracement Tool to monitor the retracement progression from the significant trough at "D" and the high labeled "E". We also want to monitor the overall retracement to verify that the retracement from the high at "E" does not exceed the 38.2% level except for our snapback provision.

Price moves down to our previous high of 1/28 at "C" shown in red (remember the previous peaks at "1" and "A" supported earlier retracements), moves just below the 50% retracement level from "D" to "E" shown in blue (the previous retracement was reversed at this % retracement level), and price has not moved below the 38.2% retracement level from the January 18th low to the new high at "E" shown in black.

We have three supporting factors here based on Fibonacci Retracement alone. There is more supporting evidence, however. We will follow the Three Counts approach briefly, realizing that this method is more detailed and is the subject of another paper.