Swing trading with Fibonacci

On 6month chart

first mark every turning point till that date.

Now, assume you go long from point A and don't know whether it will go far or not.

First, stay long till their is a turn

which incidently comes at point B.

Now, had you squared off due to fear of losing the profit midway, you would have chickened out much earlier than B.

But, who knows whether the stock can move up more even beyond point B?

May be, it will take another v-turn immedately after B and continue its dream journey up?

Who knows?

So, it is prudent to stay long, but with a stop loss.

Now, what should be that stop loss?

Here Fibonacci ratio guides us.

If you can put at stake 25% of the profits just earned

stay long with stop loss at 25% of the A-B distance below B.

Here, A-B is the reference leg.

This is based on 23.6% Fibonacci retracement.

In this case, the stop loss will be triggered and the net profit would have been locked

somewhere between B and C.

Another, smart strategy could have been to book profit immediately at the turn B and wait and watch.

Also, whether to go short after 25% fall from B is a gebuine option for professionals.

Also, had it turned up fast again after B

you should adn could have taken the long position again!

Anyhow, come to point C where nifty has taken another V turn towards up.

Now, B-C is your reference leg.

Since the retracement has taken place at around 50%, it is expected that the rally now is
a weak one.

(refer my post 'Interpreting Fibonacci Levels')

Now go long at C with C as stop loss and expecting minimum 25% of B-C length.

In this case, it crosses even the altitude of point B.

All this while, you should have been ready to book profit at 25% fall of the rise after C.

Now, the turn comes at D.

The earlier anticipation that the rally won't go very far after C has been proved right.

Hold longs till 25% of C-D leg.

In this case,

the stop loss is again triggered when you would have booked the profit.

Again, smart strategy could have been to book profit immediately at the turn D and wait and watch.

Now, you have two options after square-off.

Wait till the next turn, or

short till next turn as per Fibonacci retracement.

This way, using Fibonacci levels you can keep trading and anticipating the next move.

(If you have noticed this method is what I shared in one of my earliest posts

"Climbing the mountain with Support Hooks (Chart Practice)")

(Forget about exact percentages and decimals. Remember the concept and approximate figures)

(Also, don't use Fibonacci retracement levels for prediction only. Use it to interpret the last move to anticipate the next move.)