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Below is an example of when the price breaks through all of the Fibonacci retracement levels. In such a scenario it is highly important to be mindful of the higher timeframe key levels as a potential reversal might be in play especially if the pair closes above the 78.6% (On the daily timeframe).

  • When combining price swings, you are taking the smaller price swings and merging them with larger ones in the direction of the trend. By doing so you are also trying to find a convergence of Fibonacci numbers, perhaps a larger wave 38.2% FIB swing that may converge with a smaller wave 61.8%.

  • A high probability trade setup can be found once you have clearly established a larger price swing of an A-B, that consists of smaller a, b, c, d's.

  • Once the most recent smaller wave a, b, c has been established there is a high chance there will be a convergence of Fibonacci numbers at the smaller and larger C waves.

  • Enter the trade at the converging C wave support/ resistance in the trend direc- tion. Find the larger wave D extension for profit taking.