Using Fibonacci Retracements and Extensions

[mattgundersen]

I took the liberty of grabbing on of Alexis' screenshots and am reposting it for re-use.

In this particular example. I see you are using Fibonnaci Extensions. The first extensions were drawn from the 5->1, the next portion was from the 1->2.

So a bunch of Fib questions...

My guess is you then focus on the 1.00 and 1.618 retracements. Are there other numbers worth using?

Instead of 5->1->2 what other waves might you draw the fib numbers from?

Could you show some examples where you would use Fibonnacci Retracements instead of extensions?

[ACM]

The first extensions were drawn from the 5->1, the next portion was from the 1->2

In this case remember that we were talking about a Type 2 trade. What we do not know is if this downwards pattern will be just an ABC or something else that will develop further.
Therefore in selling at the Ellipse on wave 2 the first thing I would do is measure the wave from 5->1 and then extend that measurement starting from end of wave 2.
The conservative approach is to initially use 1.00 as that is the first target (C=A) in an ABC swing. Past that the next step will be the 1.618 which is the first of the traditional Fib extensions for a wave 3. For now the market seems to have acknowledged the first value.

As to Fib retracements there are really only two situations in which I use them from an Elliott point of view.
They are in a wave 4 and in a B of an ABC.
One example is visible in the 60 minute chart of AMZN in another message in this thread. Notice in fact that I make a comment on the chart as to how that wave 4 developed.
In the case of a wave 4 I usually seek a 0.382 to 0.500 retracement.
In the case of a B wave I look for a 0.500 to 0.750 (some purists will argue that it should be 0.786) of wave A.

I also use the Ret tool in conjunction with the Ellipse to evaluate the risk, but that is the subject of another thread of yours.

Alex