The Fib Extension Continuation Setup
The fib extension continuation setup uses the previous premarket high and low to project where an intraday move is likely to travel, then trades price passing cleanly through the midpoint.
What is the fib extension continuation setup?
The setup anchors a trend based fib extension across the premarket low and premarket high, then watches for price to pass cleanly through the 0.5 level. Price moving cleanly through 0.5 tends to continue toward the 1 level, and breaking 1 opens the 2 level as the next target.
How do you set up the fib extension correctly?
Set the extension levels to 0, 0.5, 1 and 2 and switch every other level off. For a call, place the first point on the premarket low and the second on the premarket high. For a put, reverse the order, placing the first point on the premarket high.
The third anchor, the 0 level, is placed at a recent extreme. For a call the Obsidian desk anchors 0 at a recent low wick or at the lowest wick of the opening dump. For a put the desk anchors 0 at a recent high wick or at the highest wick of the opening pump. Accuracy of these anchor points determines everything downstream, so the premarket markers must be placed precisely rather than approximately.
Which candle should the anchor use?
The Obsidian desk works from 5 minute candles only and waits for the first 5 minute candle to finish printing before using the high or low wick. If that opening candle is badly overextended and swallows the whole move, the desk uses the second 5 minute candle instead.
How is direction chosen for the setup?
Direction comes from two inputs together: the wick and general opening strength of the candle, and the dealer mechanics shown in the Cipher Strike Matrix. The Obsidian desk checks where the ceilings and floors sit, plus the current pull and trajectory, before committing to a direction.
When should a trader avoid this setup?
The Obsidian desk keeps standard call and put entries to the first two hours after the open. A wide premarket gap signals a chop day where the setup degrades, and in that case the desk marks premarket levels from a recent narrower range day instead.
- A wide premarket range points to a chop or wide ranging day
- A narrow premarket range points to a compression day that trends
- On a wide gap, mark levels from a recent narrow range day
- Look back at most a few days when borrowing those levels
- If one ticker is choppy, check an uncorrelated alternative
Frequently asked questions
Which tickers does the Obsidian desk run this setup on?
The Obsidian desk runs the setup primarily on NVDA and AAPL. The two underlyings are not closely correlated, so when one chops the other often still offers a clean structure.
Why 5 minute candles rather than 1 minute?
A 1 minute candle produces too many false wicks to anchor from reliably. The 5 minute close filters that noise while still marking the opening extreme accurately enough to project from.
What if the premarket levels are hard to place precisely?
Precision is not optional in this setup. Every projected level derives from the premarket markers, so an imprecise anchor produces targets that are wrong by the same margin all the way out.