Highly Profitable Fibonacci Retracement Strategy for Daytrading Crypto, Forex & Stocks

this video is sponsored by bitget the 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 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 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 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 tool now the question is why should you use this tool to identify pullbacks let me give you a scenario so let's say that the current market is trending and you're looking to enter a position 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 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 that a pullback tends to end at a previous key level like in this example here we can see that the price went up and consolidates at this level making this a level of resistance next we saw the price broke through the resistance 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 tend to end at a key level however what if the chart looks like this 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 and this is where the fibonacci retracement tool comes in so as i plot 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 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 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 now if you're using trading view 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 that it'll be easier for you to follow 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 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 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 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 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 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 them at the end of the candle's wick and as you can see we now have the fibonacci levels in place 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 utilize these levels so starting from the top you have your zero percent level which is basically your starting level and below that zero percent level are your fibonacci retracement levels which are levels where the price may pull back into now the most common level where the price may pull back into are these three levels 38.2 percent 50 and 61.8 percent these three levels are called the golden zone however that doesn't guarantee that the price will reverse at these levels it can always break right through and go towards the deeper levels like the 78.6 percent and the 100 now the 100 double 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 double it indicates that this downwards movement is still considered as a pullback meaning there's a chance that the price can still go back upwards but if the price moves downwards but breaks below the 100 level it indicates that this downwards movement 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 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 areas not as solid lines so now the question is how do we know at which level will the pullback end well just like normal support and resistance you cannot immediately take positions just because price touches one of the levels you need to wait for confirmation by looking at the price action let me show you an example so here we can see that the price made a slight consolidation 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 at this level 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 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 multiple times but remember a reaction doesn't equal a trade because 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 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 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 first we have price showing a reaction at the 61.8 percent 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 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 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 and for your profit target i like to set it at the zero percent level and as you can see the price hits our profit target and so this counts as a successful trade now moving on 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 you can apply the fibonacci tool to predict the end of this pullback and again you connect the swing load to the swing high and drag it to the right to extend the levels now the next step is to wait for the price to show reaction to one of these levels and as you can see the price made a pullback towards the 38.2 percent level and showed a slight reaction as seen by these three candles 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 we can see the price broke below the 38.2 percent 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 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 that are multiple green candles breaking above the 38.2 percent level so let's recap what we have currently first we have price pulling back towards an area of confluence which is a fibonacci level and a resistance level 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 conclude that the price will likely bounce at this level and so this is a good opportunity to take a long position now let's look at an example of what a bearish fibonacci retracement looks 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 right you can actually see that the 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 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 downwards movement is in fact a downtrend now once you've identified the 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 low and again drag it to the right to extend the levels the next step is wait until the price 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 this level next 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 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 percent level but then sellers came in stronger and pushed the price back down even as far as surpassing the previous candles opening price indicating that there's actual downwards momentum at this area so again let's recap what we have currently first we have price pulling back towards the fibonacci level second we have price reacting to that fibonacci level and third we spotted a bearish engulfing pattern indicating that there's some sort of downwards momentum as price touches this area so based on 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 and that's how you utilize fibonacci retracements to find trade entries now to summarize here are four key 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 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 and fourth you can combine previous support and resistance levels with fibonacci levels to create an area of confluence now before i end the video i'd like to thank our sponsor bitget for making this video possible basically bitget is a regulated cryptocurrency copy trading platform designed specifically for derivatives trading and if you sign up using the link below you'll get an instant 10 usdt for free plus a 10 rebate on your first deposit worth up to 100 and for new traders out there they're just getting started bitget 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Channel: Data Trader

Views: 74,920

Rating: 4.9567566 out of 5

Keywords: data trader, day trading, day trading strategies, stock trading, forex trading strategy, swing trading strategy, day trading strategy, fibonacci retracement, fibonacci retracement strategy, fibonacci trading crypto, fibonacci trading strategy cryptocurrency, best fibonacci retracement strategy, best fibonacci trading strategy, fibonacci levels for intraday trading, how to trade fibonacci retracement, best fibonacci retracement settings, how to use fibonacci retracement in forex

Id: DCS6lKZstp4

Length: 14min 38sec (878 seconds)

Published: Thu Aug 05 2021