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the hAnDbook oF teChnICAl AnAlysIs

Assume that the significant trough and peak of an observed price range are
point A and point B, respectively. Assume that the peak at point B is at the price
level of $100, the trough at point A is at $70, and the higher significant trough at
point C is at $85. Refer to Figure 10.31 as a visualization guide.
The formula for calculating upside projection levels above a given price range is:

Higher Trough (Price Range Projection Ratio)+ ×

In our example, the observed the price range AB is:

Price Range Peak Trough

B A

100 70

30

=−

=−

=−

=

$ $

$

(Note: We always subtract the trough from the peak, regardless of whether it
is for a downside or upside projection calculation, as the price range must always
be a positive value.)

The 61.8 percent upside projection level is:

= + ×

=+ ×

Higher Trough Price Range Projection Ratio

C Price Range 0

( )

( .. )

$ ($. )

$.

618

85 30 0 618

103 54

=+×

=

Figure 10.33 Upside Projection from a Higher Significant Trough at Point C on the
15‐min EURUSD Chart.
Source: MetaTrader 4