measure momentum for targets

  The general idea behind the Fibonacci price retracement tool is to measure momentum and segment it into proportions or ratios.  So if we have a momentum, consolidation, continuation pattern what we're looking for is a proportionate continuation.   If we have momentum and are looking for a measured move after consolidation we would look for AT LEAST half of the original momentum move for our first target.  Speed of achieving our 50% target and rejection or acceptance of this move can help gauge an expectation of a further extension, where we then look for a 1:1 target or 100% extension, or a "measured move".

So, with that said, here are some examples of the above explanation which took place today.

 The SPY triangulated for most of the day before breaking out

When price finally did break out you can measure the initial momentum (in this case I used the breakout bar) to get extensions beyond this price range:

In the above chart the 50% and 100% were achieved quickly, while the 150% extension took a steeper retracement before extending further.

Here's another example using a trade I actually took today in CREE.  The Fib.s were based on the momentum prior to a basing consolidation pattern, with the expectation of a measured move beyond $64.20.  The two blue arrows were exits taken, but I set them slightly under the actual price target.

Taking half off at 50% could at least increase the probability that we'll get filled on something, just in case our Fib. measurements were off ;)

Measured Moves Down

Here's a look at the indexes (in ETF form) over the past 14-days on a 60-minute time frame. All displaying great examples of Fibonacci Retracement levels and Extensions.
The SPY, a very nice example of a corrective A-B-C wave pattern (though A-B-C on the chart weren't meant as Elliot Wave labels). Direct overhead resistance with the 38.2% retracement (measured off of the 2/3 swing high to 2/5 swing low) which is also the previous support from 1/29 (Support-turned-Resistance?).Q's showing the 1-2-3 momentum push. Very upward to sideways-sloping consolidation cycles, compared to the others, I wonder what that says about the participants trading it? (btw, the labels 1-2-3-4-5 are not meant to be Elliot Wave counts). Confluence of Resistance at the $43.30 area where 61.8% and -27.2% meet up.DIA, yet to really "bounce"!? First move would bring it at least to a 38.2% retracement measured off of the 2/3 swing high to 2/5 swing low.and IWM, looks like just a dumping of shares (ditto DIA) these past 3 days. Watching to see how well it handles overhead resistance at 38.2%, and previous support (turned resistance?) at the 50% retracement

Mid-Day pattern

Friday I was able to short SLB on a pattern that can be worth looking out for in the mid-day session. Similar to a "Spike & Ledge" or a failed double top, or even a Head & Shoulders pattern with a more prominent right shoulder, here's a basic idea of what it looks like:It's not necessarily a very high probability pattern on it's own, though it can offer a good risk/reward entry. I think the higher time frame can give a stronger indication of a potential short trade, while the faster chart can show you the pace of buying interest (or lack of). So, here was the trade in SLB, the arrow indicating entry with a Fibonacci extension drawn to give a measured move target.
The volume in this trade is tricky. You see a lot of volume coming in at the top (position covering) with a final volume spike coming in at the ledge. Following the volume spike, price begins to climb, leading one to think this issue may push higher (in which case you should look for a bull flag to enter or a base break). However, what followed the move higher was a lack of follow-through and a bear flag!
On the fast time frame it's nice to see these little flags for entry:The Fibonacci extension was used for a primary target, but it was backed up by a few other technical levels (15-min chart 20-EMA, and the daily charts previous resistance level), I held on a little beyond my target until I saw some convincing volume and "bottoming" consolidation on the faster chart.
Here's the daily to show where previous resistance was, but also showing this same pattern presented itself in mid-November (time-frames are irrelevant in chartology, a measured move is a measured move).Now, here's an example in SPLS where this setup didn't work out so well (though still gave a measured move).
It didn't work as well as the previous example, but still gave you opportunity AND warning signs. If your short entry was before, during, or slightly after the gap down in price, you had a number of opportunities to get out at break-even or for a slight loss when you began to see price test that gap level numerous times before breaking out to new highs.