Hi, I came across your website a few days ago and have been an avid reader of the articles you have on there since.
I also purchased your Game Theory book.
I had a question about deep pullbacks and sent you an email through the website itself but I’m not sure it went through so I’m hoping to reach out via this email address I see in your support/resistance emails.
I just need some clarity on which swing is considered to be the deep pullback. For example, if we assume the market is trending up (Swing 1). It then decides to retrace (Swing 2). From here, it starts to head upwards again making retail traders think the trend is continuing (Swing 3). Near the highs, however, the trend reverses and heads downwards (Swing 4).
Is Swing 3 the deep pullback? And is that the swing which is usually around the 76.4% fib mark when compared to Swing 2?
Thank you,
My Response:
I’m not sure why I didn’t receive the email… I’ll definitely look into it.
Regarding your question: Swing 3 will be the deep pullback, and you should draw the Fibonacci tool off of Swing 2.
Any swing which retraces more than 70% on the Fibonacci scale is considered a deep pullback.
The reason I specifically use the 76.4% retracement to identify deep pullbacks is that, at this point, the majority of traders generally expect a continuation to take place.
Hope this clears things up for you.
If you have any more questions about anything, please don’t hesitate to reach out.
I’ll reply as soon as possible.
Best, PAN.