All three blocks measure a retracement: a price part of the way back along a move. A retracement of 0% is the end of the move, 50% is exactly half way back, and 100% is where the move started.
Returning into a fair value gap
This block remembers each fair value gap, read exactly as the fair value gap block reads it, including the optional minimum size.
- How far back. You set a percentage of the way into the gap, measured from the side price left from: 0 is that edge, 50 the middle, 100 the far side.
- How old. You set how many candles a gap is remembered for. An older gap is skipped as stale.
The block fires when a later candle's wick reaches that level without closing beyond the gap's far side: a long from a bullish gap, a short from a bearish one. A candle that closes beyond the far side ends the gap. Each gap fires once.
The Fibonacci blocks: the leg
Both Fibonacci blocks measure the latest leg: from the most recent swing low to a later, higher swing high (an up leg), or from a swing high to a later, lower swing low (a down leg). Swings are found exactly as the swing blocks find them, with the candles each side you choose. A newer swing replaces the leg, and only candles that close after the leg is known are read.
No Fibonacci ratio is built in. You enter the percentages you use.
Fibonacci retracement
You set a band by its two edges, as percentages of the leg back from its end. The block fires, in the direction of the leg, when a later candle's wick reaches the band's nearer edge without closing beyond its farther edge: a long on an up leg, a short on a down leg. Set both edges the same for a single level. A close beyond the farther edge ends the leg.
The entry zone some traders call the OTE is a band on this block: enter the two percentages you use.
Fibonacci extension
An extension above 100% is a level beyond the leg's end: 200% is a whole leg beyond it. You choose how it is read:
- Touch. A wick reaching the level fires against the leg: a short above an up leg, a long below a down leg.
- Breakout. A close beyond the level fires with the leg.
A close beyond the leg's start ends the leg.
Where the stop goes
- The far side and the middle. On the gap block, the gap's far side or middle. On the retracement block, the band's farther edge or its middle.
- The pattern's extreme. On the gap and extension blocks, the low or high of the candle that fired. On the retracement block, the leg's start.
- A swing window. The lowest low or highest high of a number of candles you state.
You can add a buffer of ticks beyond any of them. Each leg or gap fires once.