THE INNER AND OUTER FIBONACCI PATTERNS
A more practical way of analyzing an inner and outer Fibonacci pattern is to simply use the Fibonacci retracement on both waves. This gives you insight to where price may turn based on Fibonacci retracement levels.
Now here is where it will get confusing.
The outer Fibs retracement is the inner Fibs impulsive wave.
and
The inner Fibs retracement is the outer Fibs new impulsive wave.
Out of all this confusion comes some good. The good part is that this inner and outer Fibonacci pattern occurs often. The bad part is that this pattern occurs often and fools many traders.
You probably have seen this pattern before, but where?
Find out in part 4 of this series.
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