the hAnDbook oF teChnICAl AnAlysIsarea of observation. Therefore, AF represents the largest range. We observe the
Fibonacci retracement levels for various ranges within the largest range, AF, being
invalidated as price violates each threshold. Only Fibonacci retracement levels for
ranges AF, CF, and EF are valid.
Figure 10.59 shows a two‐leg downside retracement range. The area of observation
spans from point A to the current price. Applying the general rule, Fibonacci retrace-
ments are only drawn for ranges AD and CD, after which the practitioner may begin
looking for significant Fibonacci supportive clusters within the two‐leg formation.
As before, should price subsequently exceed the largest price range AD, all
Fibonacci retracement levels within that range are invalidated. Retracement levels
Figure 10.58 Invalidation within the Largest Observed Price Range on the Qual-
comm Inc. Daily Chart.Figure 10.59 Fibonacci Downside Retracement across the Combined Price Range
AD and CD.