Fibonacci Placement Cont'd

Nasdaq futures gapped lower on the open. The open was even with the PDL, so I place my fib lines from PDH to PDL. How do we know this is the correct way to place the Fib. lines? From the price action - NQ spent most of the session confined to the R-zone in a sideways consolidation.

On the 1 minute timeframe, I notice that NQ starts to form a bearish flag, so I plot my fibs from point A (ORH) to point B (beginning of flag). Notice how the top of the flag tags the 50% retracement level at point C. I actually entered short before the actual flag break, but normally you wait for the BO as depicted on the 1 minute chart. The first point of support on a flag pattern is the low of the pattern at point B. Notice how price consolidates at point D, forms a small base and then continues lower after testing the downsloping 20 ema. From there we get a steady move into the R-zone, a good place to lock in some profit. Eventually, NQ breaks lower, but it's a head fake as price quickly forms a bullish rounded bottom. Exit balance. From there it retraces all the way back to former support at point B, which now acts as resistance (point E). That resistance held most of the day as price consolidated sideways. The only time it breached resistance was a head fake and an invitation to short.

The S&P futures gapped wide. The open was outside of the the previous day's trading range, so we place the fibs. from PDH to ORL. Once price broke the ORL, it moved steadily to the R-zone, where it consolidated and eventually retraced back to the ORL which held as resistance.

For ES I placed my 1 minute fibs from the ORH to the early pivot low. I missed the BO, but was able to enter short after price retested former support (now resistance) and started to move lower.