Description

There is little subjectivity in these patterns because flags are identified using objective, predetermined criteria. There
is little space for trading blunders with clear entry and stop loss positions.
The extent of the correction* is frequently a sign of market selling pressure. Shallower pullbacks usually occur prior
to the subsequent impulsive leg to the downside if sellers are aggressively unloading positions. If the sellers are
truly convinced, they won’t let the market retrace much and will be eager to keep selling even at these low prices.
However, contrast this with a scenario in which the sellers are less assertive and more relaxed. Before deciding to go
short, they will want to see price hit greater levels. The continuation that follows is frequently less violent. In other
words, the impulse out is less aggressive the deeper the downturn.A common technical analysis tool for determining
the depth of a correction in relation to its prior impulse is the Fibonacci retracement. The tool uses the well-known
Fibonacci sequence’s reference points of 38.2%, 50%, and 61.8% to plot particular percentage retracement points
onto the chart. Please be aware that while many corrections have a common turning point around the 50%
retracement level, this level is not truly a Fibonacci level. www.RedblackOfficials.com
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You can modify the Fib tool in TradingView so that it only shows the levels you want to see. I’ve set up my tool to
display the 38, 50, and 62% retracement levels. These closely resemble the Fibonacci numbers.
The colors for the corresponding retracement values can also be changed. I’ve set up my tool as follows:
The 38% level and the beginning of the retracement are both shaded in dark green (highest probability).
Greener shading was used between 38 and 50 percent (valid)
the yellow (lower likelihood) shading between 50% and 62%
Any value above 62% is colored in red (low probability).
Plot the Fib into your chart in TradingView, then use the ‘Settings’ tab in the context menu of your right-click to
customize the tool..