In this example the market is in a Strong Downtrend! We know the trend is strong because the market does not rally up to the .38 Fib Retracement. It pauses at the lows. Because of this we know it is unsafe to buy the first 1.382 Fibonacci Profit Target and should wait for the 1.618 to get hit. The market carves through the first Fib Target but we expected that and stops almost on a dime at the 1.618 Fib Target. We place our buy order here at 1.3113 and set a 10 pip stop.

Most of the time this trade finds 10 to 20 pip counter trends. The farther the previous down trend has gone the bigger the counter trend move will be. Don't get greedy and exit the trade at the first signs that its stalling. In this example the market shot straight up 30 pips!



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