When Fibonacci Analysis Is Valid

Valid: clear directional impulse after breakout or in established trend; pullback underway or expected; swing points agreed upon on your timeframe.

Invalid: horizontal range with no impulse; V-reversal spike with no pullback structure; news spike candle as sole 'leg'; overlapping choppy swings.

Trend maturity: after 5th GP touch in same mega-trend, Fib edge may decay — later legs shallow. Adapt expectations.

Instrument fit: liquid trending markets respect Fib better than illiquid penny stocks gapping daily.

If you cannot explain the impulse in one sentence, Fib is not valid yet.