Thank you gentlemen for complimenting my post, I appreciate it. It is nice to know I was able to contribute in a positive manner.
I made a previous post a while back on stops that may be helpful. It really does not address initial stop placements when taking a trade. Here is the thread.
http://www.trade2win.com/boards/swing-position-trading/79670-placing-stops.html#post978472
As far as determining relevant fib levels mpat here are a couple things you can start with:
Mpat try this little exercise. Don’t try to trade this yet. You want to trade the daily. Put your fibs up on the daily chart. The more fibs you put up for this exercise the better. Use the following .236, .382, .5, .618, .707, .786, and .886. I would also use external retracements. The .707 is not technically a fib number but price seems to respect it at times and it fills the gap between the .618 and .786. Then (in Elliott wave terms) pick a thrust, say wave 1 of 1 or 3 of 5, it really doesn’t matter the thrust you pick on the daily. Then drop down to say the 60 minute chart. Where you see the thrust on the daily you may see a 5 wave corresponding trend representing that thrust on the 60 minute. Again put all the fibs up on the lower timeframe. Now draw these fibs on the weekly chart. When finished you want to have the fib levels from all 3 timeframes on your daily chart at the same time. Look for an area where the fibs from the different timeframes are close together or overlap concerning price. If you see a grouping of Fibs from multiple timeframes in one area, this area may be more significant. This may help you with your stop placement too. I like to place my stops above/below where a number of fib levels come together tightly when entering a trade, in other words the fibs coming together in a group would be one example of a fib cluster. The purpose of this little exercise is just to introduce you to the concept. You can investigate this further if you wish to use this technique.
Mpat you mentioned watching barriers. This is important. I always watch barriers to see if that level will or will not fall into my fib cluster, especially more major areas of support or resistance. In other words, support or resistance may coincide with and may help confirm relevant fib levels.
If you look at my previous post in this thread I described points on an abc pattern, ABCD. I am going to refer to those here. What I describe below will be in reference to a bull market.
When you see a simple abc pattern, point C is often near or at a fib level(s). (Draw your Fib from A point to B point. This is a fib drawn off the abc pattern itself.) This simple abc pattern may also be seen as a small area of consolidation in classical technical analysis. An irregular or flat abc may be easiest to visualize this. So what we may have here can be viewed as a mini range if you will, the difference in price between point A or C point whichever is higher, and points B or D, whichever is lowest. (D point would be the end of wave c.) I like to take trades off of the D point. D point (not always) will be the bottom of the range. So if you go long at D point you will typically see a reaction near C point or the Fib level(s) there or the top of the range. This reaction commonly plays out in 2 scenarios. The first, those long at D point start to take profits near C point causing price to breakdown and retest D point. This is a resistance level. This may be due to those taking profits as price rebounds higher from B point, or scalping. (Price will often recover then move up past C point.) The second is once price nears the C point level, again from going long at D point, frequently there is some hesitation, a battle between buyers and sellers, then price continues above C point. These are traders who believe the bullish trend is resuming or playing the break out of the range if you will. They are buying near C point. After the breakout, price will turn down and may retest the C point area. In this latter scenario the C point area and the fib level(s) there have now become support. This is a general guide and in reference to your question, is an area to look for relevant fib levels. This is important because it will help you set your stops, provides a good entry point and even a second opportunity to enter if you missed the entry point at point D. These scenarios are addressed differently in Elliott Wave terms. One of the ways to view it is the move up from D point could be a wave one with the pullback wave 2.
It's about confluence. If a fib level coincides with a round number and a major support level plus a major trendline, enough traders will go "Ooh!" and place a trade in the relevant direction!
