The Fib Extension Reversal Setup
The reversal variant of the fib extension setup is used after price has trended all session, to test whether a genuine turn is developing against that trend.
What is the fib extension reversal setup?
The reversal setup uses the same premarket anchoring as the continuation setup, except the 0 level is placed at the newest session high or low. A trader then tracks whether price can travel from that fresh extreme all the way back through the 0.5 level and into the 1 level.
What confirms a reversal?
A reversal is confirmed only when price moves from the new extreme at the 0 level, through the 0.5 level, and then pushes into and above the 1 level. Reaching 0.5 alone is not confirmation, because a counter trend bounce commonly stalls at that midpoint.
What counts as a clean break of the 1 level?
The Obsidian desk requires a decisive break through the 1 level. Wicks do not count, touches do not count, and weak candles do not count. Watching on a 1 minute chart makes the difference between a genuine push through and a failing test obvious.
When is a reversal setup unlikely to work?
An extreme negative trend day makes a call reversal close to impossible, and an extreme positive gamma day makes a put reversal close to impossible. The Obsidian desk also waits for a substantial trend to develop before hunting for the local peak or trough at all.