Best Fibonacci Retracement Strategy for Day Trading Crypto, Forex & Stocks

[00:02] leading cryptocurrency copy trading platform. Earn 10 USDT for free by signing up using the link in the description below. In this video, I'll be showing you everything you need to know about Fibonacci retracements and

[00:15] how you can use it in combination with price action. And so, what you'll learn from this video is first, how to actually plot them properly onto a chart. Second, how to find high win rate trade entries using Fibonacci levels.

[00:29] And third, how to properly exit your trades to get as much profit as possible. Now, let's start with the basics. What are Fibonacci retracements? So, Fibonacci retracements are key levels

[00:44] based on the Fibonacci number that lets you identify the end of a pullback. And we can generate these levels by using a tool called the Fibonacci retracement Now, the question is, why should you use this tool to identify pullbacks? Let me

[00:58] So, let's say that the current market is trending and you're looking to enter a Now, we know that the best time to enter a position at a trending market is to wait for the trend to make a pullback. So, as price makes a pullback, you can

[01:13] enter a buy position at the end of the pullback before the price continues with the main trend. And so, how do we know that this point will be the end of the pullback? Well, in my previous video, I mentioned

[01:25] that a pullback tends to end at a previous key level. Like in this here, we can see that the price went up and consolidates at this level, making this a level of resistance. Next, we saw

[01:38] level and made a pullback. Now, notice where the pullback ended, the previous resistance level that we drew earlier. And so, it's widely known that pullbacks And so, it's widely known that pullbacks tend to end at a key level. However,

[01:51] instead, where the price went up and made a pullback, but there are no previous key level? How do we know when this pullback will end? retracement tool comes in. So, as I plot

[02:05] the tool onto our chart, notice that we now have these Fibonacci-based key levels generated by the tool. And as you can see, the price hits one of the levels and bounced upwards. So, it's widely

[02:18] known among traders that price tends to respect these levels. Another example of this would be the S&P 500 market crash back in March 2020. So, here, as we apply the Fibonacci retracement tool,

[02:32] you can see that the level predicted the exact bottom of the market crash. And now, I'm going to show you how to apply this tool onto your chart and how you can use it to find high win rate trade opportunities.

[02:46] Now, if you're using TradingView, the Fibonacci tool can be found on the right side of the screen. So, you click it and select Fibonacci retracements. Now, for the settings, I want you to copy this exact value so

[03:00] along. And so, here's how you apply the tool onto your chart. So, the first step is you want to find a clear trend. Like in this example, here, we can see that the market is

[03:14] clearly moving upwards. Now, once you've identified the trend, the next step is applying the Fibonacci retracement. So, to apply the Fibonacci retracement, you first need to identify both the swing low and the swing high of this

[03:28] trend. So, a swing low refers to the lowest point the price reached before reversing upwards. And over here, we can see that the price slightly went down before reversing back up. And at this period, this was the lowest point. And

[03:42] so, this will be our swing low. Similarly, a swing high refers to the highest point the price reached before reversing downwards. Like in this example, up here, we can see that the price went up and slightly made a

[03:55] pullback. And at this period, this was clearly the highest point, and so this will be our swing high. And remember, in order to identify a swing high, a small pullback at the end of the trend needs to happen first.

[04:09] Now, once you've identified the swing high and the swing low, the next step is drawing the Fibonacci tool by connecting the swing low to the swing high, and then drag it to the right to extend the levels. Now, notice that I'm connecting

[04:22] them at the end of the candle's wick. And as you can see, we now have the And again, I advise you to follow the custom settings that I have so that it'll be easier for you to follow along. So now, I'm going to show you how to

[04:37] utilize these levels. So starting from the top, you have your 0% level, which is basically your starting level. And below that 0% level are your Fibonacci retracement levels, which are

[04:49] into. Now, the most common level where the price may pull back into are these three levels: 38.2%, 50%, and 61.8%.

[05:02] These three levels are called the golden zone. However, that doesn't guarantee levels. It can always break right through and go towards the deeper levels like the 78.6% and the 100%.

[05:16] and the 100%. Now, the 100% level is the maximum level where the price can still be considered as a pullback. Let me explain. So if the price moved downwards but remains above the 100% level, it

[05:29] is still considered as a pullback, meaning there's a chance that the price can still go back upwards. But, if the price moved downwards but breaks below the 100% level, it indicates that this downwards movement

[05:43] is no longer considered as just a pullback, but rather it can already be classified as a downtrend, meaning the price is more likely to continue downwards instead. And so, if the price breaks below the

[05:55] 100% level, you cancel your trade and look for other opportunities. Now, a key point that you need to remember is that you need to treat these levels exactly like support and resistance, meaning we treat them as

[06:07] resistance, meaning we treat them as areas, not as solid lines. So, now the question is, how do we know at which level will the pullback end? resistance, you cannot immediately take positions just because price touches one

[06:21] of the levels. You need to wait for confirmation by looking at the price confirmation by looking at the price action. Let me show you an example. we can see that the price made a slight consolidation

[06:34] then proceeds to break below the 38.2% level. Now, what this shows us is that price is clearly not respecting this level because it showed no reaction at all, meaning the price will not likely bounce

[06:47] Next we can see that it also broke the 50% level without any reaction, again indicating that the price doesn't respect this level. Now

[07:00] as price approaches the 61.8% level, notice what's happening. The price showed a small reaction at this area as it failed to break below it But, remember a reaction doesn't equal a trade because

[07:13] price can always react to a level but still break right through. And so, you need further confirmation. Next, we also spotted a bullish engulfing pattern, which is when the second candle's body completely covers

[07:25] the previous candle. And so, what this shows us is that not only do we have a reaction at this area as shown by these candles rejecting but we also have upwards momentum as shown by this bullish engulfing pattern.

[07:38] Then, to further confirm the upwards momentum, we can see that the next candles after that are multiple green candles breaking above resistance at the 50% level. Now, let's recap what we have currently.

[07:52] First, we have price showing a reaction at the 61.8% level as shown by multiple candles failing to break below it. Then, we have a bullish engulfing pattern indicating that there's some sort of upwards momentum at this level.

[08:06] And finally, we have multiple green candles breaking above the resistance at the 50% level, which further confirms the upwards momentum that we already have. So, based on the price action, it is likely that the price will bounce off

[08:19] at this level. And so, this is a good opportunity to take a long position. Now, just in case the trade fails, you need to have your exit strategy in place. So, for your stop loss, you can place it at the swing low.

[08:32] And for your profit target, I like to set it at the 0% level. set it at the 0% level. And as you can see, this counts as a successful trade. Now, moving on.

[08:48] You can also combine existing support and resistance levels with Fibonacci levels to create an area of confluence, like in this example. So, here we can see that the price went up and made a slight pullback. And so,

[09:00] you can apply the Fibonacci tool to predict the end of this pullback. And again, you connect the swing low to the swing high and drag it to the right to extend the levels. Now, the next step is to wait for the

[09:12] price to show reaction to one of these levels. And as you can see, 38.2% level and showed a slight reaction as seen by these three candles

[09:24] consolidating at this level. But again, a reaction doesn't equal a trade because price can always react to a level, but still break right through. And so, we also need signs of upwards momentum. And after that,

[09:39] we can see the price broke below the 38.2% and ended up at the 50%. Now, if you look closely, you can actually see that this level is also aligned with the previous resistance level because at one point, the price

[09:53] went up to this level and reverses downwards, meaning we now have an area of confluence. And usually, price has a higher chance of bouncing at this level. And to further confirm that, we can see that the next candles after

[10:06] that are multiple green candles breaking above the 38.2% level. So, let's recap what we have currently. First, we have price pulling back towards an area of confluence, which is

[10:19] at the same time. And second, we can also see signs of upwards momentum indicated by multiple green candles breaking above the 38.2% level. So, based on this, we can

[10:32] conclude that the price will likely bounce at this level. And so, this is a good opportunity to take a long position.

[10:45] like. So again, since it's bearish, the first step is finding a downtrend. And in this chart, we can see that the price moved downwards. Now, here's where people tend to get confused. If you look to the

[10:59] price moved upwards before going downwards. And so, the question is, how do we know that this downwards movement is a downtrend itself and not just a pullback as part of this uptrend? Well, the way we know that is by

[11:13] identifying the long-term trend using the 200 EMA indicator. And in this example, we can see that the price is below the 200 EMA, meaning this downtrend. Now, once you've identified the

[11:28] downtrend, the next step is applying the Fibonacci retracement tool. And since it's bearish, you want to start from the swing high and connect it to the swing extend the levels. The next step is wait until the price

[11:42] shows a reaction to one of the levels. So, as you can see, as price approaches the 38.2% level, we spotted multiple small candles failing to break above the level, indicating that the price is actually reacting to

[11:56] Next, we can see a green candle that broke we can see a green candle that broke through the 38.2% level, immediately followed by a big red candle that engulfs the previous candle. So,

[12:08] what this shows us is that at one point, buyers pushed the price upwards, as shown by this green candle breaking above the 38.2% level, but then sellers came in stronger and pushed the price back down, even as far as surpassing the

[12:21] previous candle's opening price, indicating that there's actual downward momentum at this area. So, again, let's recap what we have First, we have price pulling back towards a Fibonacci level.

[12:34] Second, we have price reacting to that Fibonacci level. And third, we spotted a bearish engulfing pattern indicating that there's some sort of downward momentum as price touches this area. So, based on

[12:46] this, it is likely that the price will bounce off at this level. And so, this is a good opportunity to take a short position. retracements to find trade entries. Now, to summarize, here are four key

[13:02] takeaways from the video. The first one is that Fibonacci levels behave exactly like support and resistance, so treat them as areas, not as solid lines. Second, before plotting the Fibonacci retracement, make sure to

[13:15] identify the long-term trend first, and you can do that by using the 200 EMA. Third, always wait for confirmation before entering a position. support and resistance levels with Fibonacci levels to create an area of

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