How to calculate the 'missing' Fibonacci level - and profit from it

John C Burford explains how to use Fibonacci retracement via an example trade from the US Treasury bond market.

As you may know, I rely heavily on my trusty Fibonacci retracement tool on my spread-betting platform. In most cases, the percentage retracements built into the tool give pretty accurate turning points for rallies in a bear market, and dips in a bull market.

Fibonacci retracement analysis can work in any time-frame from weekly to minute-by-minute charts. This is down to the fractal nature of markets. I have covered this principle in the glossary. But it comes down to the fact that the interplay of traders' emotions over very short time-frames is identical to that over longer time-spans.

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John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.