Chart Reading ⓪-3 — Fibonacci Retracement: Drawn End to End of a Wave

Where to draw — end to end

• Fibonacci retracement is a tool drawn between the start and end points of a single wave

• It can be drawn on each of the three steps: from the start to the end of the prior trend, of the convergence, or of the current trend

• Which wave it is drawn on determines the meaning of the levels — choosing the wave is half the job

When to draw

• The right time is when a pullback appears after a trend reversal on the relevant lower timeframe — drawing in advance without a signal that the wave has ended (a lower-timeframe reversal) leaves the end point still moving

• Retracement levels are not predictions but candidate zones to observe — judgment rests on the reaction at that level (candles, volume)

Connection to our data

• Where a Fibonacci level overlaps MarketSurfer's 1st to 3rd support/resistance, confluence (overlapping evidence) raises reliability — overlapping levels take priority over a lone level

Where people slip

• They draw it in advance on a wave still in progress and then say the levels were wrong — a wave that has not ended has no end point

The order is: pick the wave (prior trend/convergence/current trend), confirm the end with a lower-timeframe reversal, draw end to end, and wait for the reaction at the level.