Going Beyond Retracements
Presents...
Going Beyond Retracements Basics Of Fibonacci Expansions By Marcille Grapa
www.ScientificForex.com
RISK DISCLOSURE STATEMENT / DISCLAIMER AGREEMENT
Trading any financial market involves risk. This report and all and any of its contents are neither a solicitation nor an offer to Buy/Sell any financial market. The contents of this material are for general information and educational purposes only (contents shall also mean the website http://www.scientificforex.com/ or any website the content is hosted on, and any email correspondence or newsletters or postings related to such website). Every effort has been made to accurately represent this product and its potential. There is no guarantee that you will earn any money using the techniques, ideas and software in these materials. Examples in these materials are not to be interpreted as a promise or guarantee of earnings. Earning potential is entirely dependent on the person using our product, ideas and techniques. We do not purport this to be a “get rich scheme.” Although every attempt has been made to assure accuracy, we do not give any express or implied warranty as to its accuracy. We do not accept any liability for error or omission. Examples are provided for illustrative purposes only and should not be construed as investment advice or strategy. No representation is being made that any account or trader will or is likely to achieve profits or losses similar to those discussed in this report or anywhere on http://www.scientificforex.com/. Past performance is not indicative of future results. By purchasing any content, subscribing to our mailing list or using the website or contents of the website or materials provided herewith, you will be deemed to have accepted these terms and conditions in full as appear also on our site, as do our full earnings disclaimer and privacy policy and CFTC disclaimer and rule 4.41 to be read herewith. So too, all the materials contained within this course, including this manual, whether they appear on our domain(s) or are in physical form, are protected by copyright. "Warning: The unauthorized reproduction or distribution of this copyrighted work is illegal. Criminal copyright infringement, including infringement without monetary gain, is investigated by the authorities and is punishable with imprisonment and a fine." We reserve all our rights in this regard. Old Tree Publishing CC, in association with http://www.scientificforex.com/, the website, content, and its representatives do not and cannot give investment advice or invite customers or readers to engage in investments through this course or any part of it. The information provided in this content is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject us to any registration requirement within such jurisdiction or country. Hypothetical performance results have many inherent limitations, some of which are mentioned below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and actual results subsequently achieved by any particular trading program and method. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program or system in spite of the trading losses are material points that can also adversely affect trading results. There are numerous other factors related to the market in general or to the implementation of any specific trading program, which cannot be fully accounted for in the preparation of hypothetical performance results. All of which can adversely affect actual trading results. We reserve the right to change these terms and conditions without notice. You can check for updates to this disclaimer at any time by visiting http://www.scientificforex.com/. Governing law: this policy and the use of this report/eBook, provided in any form, and any content on the website are governed by the laws of the Republic of South Africa. Further details on this are found under the Terms and Conditions on our site. Please ensure you read and agree with all Terms and Conditions as set out on our site before using any of the materials. Your use and reliance on the materials is based on your acceptance of such Terms and Conditions and policies as appear on the site.
www.ScientificForex.com
Going Beyond Retracements
Fibonacci expansions are not used as often as Fibonacci retracements. In fact, some traders who use retracements are not familiar with them. But just because the expansion tool is not as famous as the retracements, it does not mean it’s not useful. The Fibonacci expansion tool is actually very useful especially in situations when the retracement tool is not applicable. So, if you’re one of the traders who are not sure what Fibonacci expansions are, today’s your lucky day! In this report, I will explain exactly what they are and how you can use them to your advantage. Another term for Fibonacci expansion is Fibonacci extension. Its values are based on the ratios of the Fibonacci numbers, discovered by Leonardo Fibonacci da Pisa. The Fibonacci sequence is a series of numbers where each number is the sum of the two numbers preceding it, except for the first two numbers.
Fibonacci ratios define the mathematical relationship of these numbers. Below are the common Fibonacci ratios.
These ratios represent areas of support and resistance, which means, price will most likely retrace once it reaches each level, if it does not break out of that level. These ratios are the basis for the Fibonacci retracements and expansions.
www.ScientificForex.com
Short Review On Fibonacci Retracements
Fibonacci retracements indicate the potential levels of retracement on the price chart. Fibonacci retracements are drawn by connecting two points on the chart: the highest high and the lowest low. If the trend was going up, the Fibonacci retracement would be drawn from the lowest low to the highest high. But if it is a downtrend, the retracement is drawn from the highest high to the lowest low.
In the example below, the initial trend is going down, so the Fibonacci retracement was drawn from the highest high to the lowest low.
www.ScientificForex.com
How To Add New Fibonacci Levels
Adding new levels is easy, but before I show you how to do that, below are the possible values you can have in your Fibonacci retracement tool: Level
Description
(Decimal Value)
(Percentage Value)
0.000
0.0%
0.130
13.0%
0.236
23.6%
0.382
38.2%
0.414
41.4%
0.500
50.0%
0.618
61.8%
0.707
70.7%
0.786
78.6%
0.886
88.6%
1.000
100.0%
1.130
113.0%
1.270
127.0%
1.141
141.4%
1.618
161.8%
Follow these steps to add more levels to your Fibonacci tool: Step 1: Draw a Fibonacci retracement. Step 2: Double-click on the broken line to activate the nodes (three dots just like what you see on a trendline).
www.ScientificForex.com Step 3: Right-click on the broken line and select “Fibo properties”
Step 4: Click on the “Add” button. Step 5: Enter the decimal value under “Level”. For example: “1.618”. You can refer to the table in the previous page. Step 6: Fill in the percentage value under “Description”. For example: “161.8”. If you wish to display the price value on the chart, add a space and the symbols “%$” after the number.
www.ScientificForex.com
Fibonacci Expansion
Fibonacci expansions are retracement levels beyond the usual 100%. If you are in a buy trade and price exceeds 100%, the expansion levels can be used to find a target. Supposing you have two waves that are in an uptrend, if you apply the Fibonacci retracement on wave 1, it can’t be used in identifying where wave 3 would possibly end.
This is when Fibonacci expansions come in. Fibonacci expansions are normally used for predicting the end of the third wave in an Elliot wave cycle. That means the first two waves have already formed.
www.ScientificForex.com To apply the Fibonacci expansion, click on “Insert” in the main menu of your MetaTrader4 platform. Click on “Fibonacci” and select “Expansion”.
In an uptrend, apply the Fibonacci expansion by connecting the lowest low (1), the next swing high (2), and the next swing low (3). In a downtrend, you should start applying the expansions by connecting the highest high (1), the next swing low (2), and the next swing high (3).
www.ScientificForex.com
The usual values for the Fibonacci expansions are 61.8%, 100% and 161%. However, you can add more levels by following the same steps in adding the levels for Fibonacci retracements. Below are the values you can use. Level
Description
(Decimal Value)
(Percentage Value)
0.618
61.8%
1.000
100.0%
1.618
161.8%
0.707
70.7%
0.786
78.6%
0.500
50.0%
0.886
88.6%
1.130
113.0%
1.270
127.0%
1.141
141.4%
Have a look at the example below. In this uptrend, waves 1 and 2 have already formed. The Fibonacci expansions show the possible levels that wave 3 ends.
www.ScientificForex.com
After a few hours, wave 3 reached 113% then almost touched 127%.
But, what if you’re not familiar with the Elliot waves? You can still use the Fibonacci expansions, I will show you how in the next page.
www.ScientificForex.com Even if you’re not familiar with the Elliot waves, Fibonacci expansions are also useful during breakouts after a period of consolidation. Supposing you have a ranging market, and the price breaks the support or resistance level. The expansions will help identifying where the price will most likely retrace. Have a look at the example below.
We have a downtrend because the price broke the support level. This expansion is applied by connecting the swing high, swing low and the most recent swing high. Usually, the price will reach the expansion levels depending on the strength of the move. The targets are normally 100%, 113%, 127%, 141.4% and 161.8%. Now, the price has already reached 100% so we are looking for the next targets.
www.ScientificForex.com
As you can see, price reached all the targets in the next few hours. Pretty cool, right?
However, not all situations are as pretty as this, so it’s good to be cautious and use other indicators and trading techniques to back you up.
www.ScientificForex.com
Have a closer look at the last example once again. Notice that if you draw a line connecting the first swing high and the swing low, you actually have Wave 1. If you connect the swing low to the next swing high, you have Wave 2. Finally, Wave 3 can be seen if you connect the last swing high to 161.8% Fibonacci expansion level.
Following Wave 3, the price moved up to form Wave 4. And right now, we are waiting for Wave 5 to form.
www.ScientificForex.com
Conclusion
I’m sure you now have a better understanding of what the Fibonacci expansions are for. It’s a really simple tool. Just practice applying it and remember that if the trend is an uptrend, you start drawing from the bottom going up: swing low to swing high then to another swing low. For a downtrend, you start from the top going down: swing high to swing low then to another swing high. The main difference with Fibonacci retracements and expansions is that retracements are applied using two points while expansions are applied using three points. Also, expansions are used when retracements cannot be applied. Usually, the Fibonacci expansion is used with other techniques, which help establish the best entries and exits for the trade. Fibonacci expansions are great for identifying targets that exceed previous highs or lows because it projects the Fibonacci ratios which are the probable levels that price will reach.
Marcille Grapa www.ScientificForex.com
Going Beyond Retracements Basics Of Fibonacci Expansions By Marcille Grapa
www.ScientificForex.com
RISK DISCLOSURE STATEMENT / DISCLAIMER AGREEMENT
Trading any financial market involves risk. This report and all and any of its contents are neither a solicitation nor an offer to Buy/Sell any financial market. The contents of this material are for general information and educational purposes only (contents shall also mean the website http://www.scientificforex.com/ or any website the content is hosted on, and any email correspondence or newsletters or postings related to such website). Every effort has been made to accurately represent this product and its potential. There is no guarantee that you will earn any money using the techniques, ideas and software in these materials. Examples in these materials are not to be interpreted as a promise or guarantee of earnings. Earning potential is entirely dependent on the person using our product, ideas and techniques. We do not purport this to be a “get rich scheme.” Although every attempt has been made to assure accuracy, we do not give any express or implied warranty as to its accuracy. We do not accept any liability for error or omission. Examples are provided for illustrative purposes only and should not be construed as investment advice or strategy. No representation is being made that any account or trader will or is likely to achieve profits or losses similar to those discussed in this report or anywhere on http://www.scientificforex.com/. Past performance is not indicative of future results. By purchasing any content, subscribing to our mailing list or using the website or contents of the website or materials provided herewith, you will be deemed to have accepted these terms and conditions in full as appear also on our site, as do our full earnings disclaimer and privacy policy and CFTC disclaimer and rule 4.41 to be read herewith. So too, all the materials contained within this course, including this manual, whether they appear on our domain(s) or are in physical form, are protected by copyright. "Warning: The unauthorized reproduction or distribution of this copyrighted work is illegal. Criminal copyright infringement, including infringement without monetary gain, is investigated by the authorities and is punishable with imprisonment and a fine." We reserve all our rights in this regard. Old Tree Publishing CC, in association with http://www.scientificforex.com/, the website, content, and its representatives do not and cannot give investment advice or invite customers or readers to engage in investments through this course or any part of it. The information provided in this content is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject us to any registration requirement within such jurisdiction or country. Hypothetical performance results have many inherent limitations, some of which are mentioned below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and actual results subsequently achieved by any particular trading program and method. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program or system in spite of the trading losses are material points that can also adversely affect trading results. There are numerous other factors related to the market in general or to the implementation of any specific trading program, which cannot be fully accounted for in the preparation of hypothetical performance results. All of which can adversely affect actual trading results. We reserve the right to change these terms and conditions without notice. You can check for updates to this disclaimer at any time by visiting http://www.scientificforex.com/. Governing law: this policy and the use of this report/eBook, provided in any form, and any content on the website are governed by the laws of the Republic of South Africa. Further details on this are found under the Terms and Conditions on our site. Please ensure you read and agree with all Terms and Conditions as set out on our site before using any of the materials. Your use and reliance on the materials is based on your acceptance of such Terms and Conditions and policies as appear on the site.
www.ScientificForex.com
Going Beyond Retracements
Fibonacci expansions are not used as often as Fibonacci retracements. In fact, some traders who use retracements are not familiar with them. But just because the expansion tool is not as famous as the retracements, it does not mean it’s not useful. The Fibonacci expansion tool is actually very useful especially in situations when the retracement tool is not applicable. So, if you’re one of the traders who are not sure what Fibonacci expansions are, today’s your lucky day! In this report, I will explain exactly what they are and how you can use them to your advantage. Another term for Fibonacci expansion is Fibonacci extension. Its values are based on the ratios of the Fibonacci numbers, discovered by Leonardo Fibonacci da Pisa. The Fibonacci sequence is a series of numbers where each number is the sum of the two numbers preceding it, except for the first two numbers.
Fibonacci ratios define the mathematical relationship of these numbers. Below are the common Fibonacci ratios.
These ratios represent areas of support and resistance, which means, price will most likely retrace once it reaches each level, if it does not break out of that level. These ratios are the basis for the Fibonacci retracements and expansions.
www.ScientificForex.com
Short Review On Fibonacci Retracements
Fibonacci retracements indicate the potential levels of retracement on the price chart. Fibonacci retracements are drawn by connecting two points on the chart: the highest high and the lowest low. If the trend was going up, the Fibonacci retracement would be drawn from the lowest low to the highest high. But if it is a downtrend, the retracement is drawn from the highest high to the lowest low.
In the example below, the initial trend is going down, so the Fibonacci retracement was drawn from the highest high to the lowest low.
www.ScientificForex.com
How To Add New Fibonacci Levels
Adding new levels is easy, but before I show you how to do that, below are the possible values you can have in your Fibonacci retracement tool: Level
Description
(Decimal Value)
(Percentage Value)
0.000
0.0%
0.130
13.0%
0.236
23.6%
0.382
38.2%
0.414
41.4%
0.500
50.0%
0.618
61.8%
0.707
70.7%
0.786
78.6%
0.886
88.6%
1.000
100.0%
1.130
113.0%
1.270
127.0%
1.141
141.4%
1.618
161.8%
Follow these steps to add more levels to your Fibonacci tool: Step 1: Draw a Fibonacci retracement. Step 2: Double-click on the broken line to activate the nodes (three dots just like what you see on a trendline).
www.ScientificForex.com Step 3: Right-click on the broken line and select “Fibo properties”
Step 4: Click on the “Add” button. Step 5: Enter the decimal value under “Level”. For example: “1.618”. You can refer to the table in the previous page. Step 6: Fill in the percentage value under “Description”. For example: “161.8”. If you wish to display the price value on the chart, add a space and the symbols “%$” after the number.
www.ScientificForex.com
Fibonacci Expansion
Fibonacci expansions are retracement levels beyond the usual 100%. If you are in a buy trade and price exceeds 100%, the expansion levels can be used to find a target. Supposing you have two waves that are in an uptrend, if you apply the Fibonacci retracement on wave 1, it can’t be used in identifying where wave 3 would possibly end.
This is when Fibonacci expansions come in. Fibonacci expansions are normally used for predicting the end of the third wave in an Elliot wave cycle. That means the first two waves have already formed.
www.ScientificForex.com To apply the Fibonacci expansion, click on “Insert” in the main menu of your MetaTrader4 platform. Click on “Fibonacci” and select “Expansion”.
In an uptrend, apply the Fibonacci expansion by connecting the lowest low (1), the next swing high (2), and the next swing low (3). In a downtrend, you should start applying the expansions by connecting the highest high (1), the next swing low (2), and the next swing high (3).
www.ScientificForex.com
The usual values for the Fibonacci expansions are 61.8%, 100% and 161%. However, you can add more levels by following the same steps in adding the levels for Fibonacci retracements. Below are the values you can use. Level
Description
(Decimal Value)
(Percentage Value)
0.618
61.8%
1.000
100.0%
1.618
161.8%
0.707
70.7%
0.786
78.6%
0.500
50.0%
0.886
88.6%
1.130
113.0%
1.270
127.0%
1.141
141.4%
Have a look at the example below. In this uptrend, waves 1 and 2 have already formed. The Fibonacci expansions show the possible levels that wave 3 ends.
www.ScientificForex.com
After a few hours, wave 3 reached 113% then almost touched 127%.
But, what if you’re not familiar with the Elliot waves? You can still use the Fibonacci expansions, I will show you how in the next page.
www.ScientificForex.com Even if you’re not familiar with the Elliot waves, Fibonacci expansions are also useful during breakouts after a period of consolidation. Supposing you have a ranging market, and the price breaks the support or resistance level. The expansions will help identifying where the price will most likely retrace. Have a look at the example below.
We have a downtrend because the price broke the support level. This expansion is applied by connecting the swing high, swing low and the most recent swing high. Usually, the price will reach the expansion levels depending on the strength of the move. The targets are normally 100%, 113%, 127%, 141.4% and 161.8%. Now, the price has already reached 100% so we are looking for the next targets.
www.ScientificForex.com
As you can see, price reached all the targets in the next few hours. Pretty cool, right?
However, not all situations are as pretty as this, so it’s good to be cautious and use other indicators and trading techniques to back you up.
www.ScientificForex.com
Have a closer look at the last example once again. Notice that if you draw a line connecting the first swing high and the swing low, you actually have Wave 1. If you connect the swing low to the next swing high, you have Wave 2. Finally, Wave 3 can be seen if you connect the last swing high to 161.8% Fibonacci expansion level.
Following Wave 3, the price moved up to form Wave 4. And right now, we are waiting for Wave 5 to form.
www.ScientificForex.com
Conclusion
I’m sure you now have a better understanding of what the Fibonacci expansions are for. It’s a really simple tool. Just practice applying it and remember that if the trend is an uptrend, you start drawing from the bottom going up: swing low to swing high then to another swing low. For a downtrend, you start from the top going down: swing high to swing low then to another swing high. The main difference with Fibonacci retracements and expansions is that retracements are applied using two points while expansions are applied using three points. Also, expansions are used when retracements cannot be applied. Usually, the Fibonacci expansion is used with other techniques, which help establish the best entries and exits for the trade. Fibonacci expansions are great for identifying targets that exceed previous highs or lows because it projects the Fibonacci ratios which are the probable levels that price will reach.
Marcille Grapa www.ScientificForex.com
