Retracements , Long*

Ideal Market

A sharp upward trend has developed after a reversal

Enter

Upon confirmation of a continuation move

Stop

Since these normally occur at the 50% retracement level, just below this level is good place for your stop

Target

100% of previous move before gap occurred

Stopped Out?

Could be reversal - proceed to Exhaustion Gap, Short...

Trade Management

Fibonacci standard applied from original 50% retracement level to 100% level

*For a short trade on a Measured Gap, invert the chart and trading strategy.

"Measured gaps occur at (approximately) the 50% point of moves, and are more difficult to identify when they happen. But as price moves in the direction of the gap, it can become apparent that the gap has likely marked the 50% point, giving us a target for the end of the move."

Ed Downs
7 Chart Patterns That
Consistently Make Money

"The Fibonacci retracement phenomenon happens over and over in markets of all kinds. ...It would seem that any market which is liquid (has reasonable volume) works well with this technique."