How to Use the Fibonacci Retracement Tool to make that Crypto Trading Money

in this video i will show you how i personally use the fibonacci retracement tool in my trading on a daily basis a lot of you guys have asked me about this because you have seen me use it in my day trading challenge on almost every trade so i thought it would be a good time to make a video about the fibonacci tool and how to use it in day trading and swing trading but it can also be used in investing actually to find good entries for long term investing so first of all i want to show you how to set up the tool and how to configure it so it looks like like it does for me it's a bit different from the default default one so let's open up a new trading view window so this is what the trading view looks like the first time you open up trading view and the obvious changes i want to do is change the line to canvas instead and then i want to change the background from from white to to a darker background so it's more easy to the eyes and you will find the fib tool in the left menu here on this small arrow and you go to fib retracement right here and now you can drag the tool from this bottom to this top and this is what it looks like as a default and i want to make a few changes so to change the tool uh you can just double click on it on any of these lines you cannot just double click in the middle of of nowhere here you have to click on one of the lines and this will bring you to the settings for the tool so the first thing i wanted i want to change i want to remove this background color i think this background color is a bit distracting and it's a bit ugly so let's just disable the background right here and then i want to add the golden pocket level i will explain everything about this in a moment i will just i just want to show you how to configure it first so you see that you have these numbers active at the moment and you have a lot of numbers here that are not active so you want to enable one more level you can pick any one of these and type in the field 0.65 and i usually use a yellow color as in golden and now the tool looks exactly as it does for me when i'm trading in my other videos oh there's just one more change i think i use another color for the 3a2 level i think it might be like orange or something so i will go back to my tradingview account and now we can start using the the tool but first a small introduction to fibonacci and what it is the fibonacci retracement tool is based on a mathematical sequence called the fibonacci sequence this sequence was invented by a mathematical genius from italy in the year 1200 called leonardo fibonacci and he invented a lot of very interesting math formulas and really took the math to a whole new level at that time and one of his most famous work is the fibonacci sequence and the golden ratio and there's a whole science behind this sequence and the golden ratio but i'm not going to go into that in this video because it's not required to know this when you're trading but it can be really interesting to notice if you want to know more about the fibonacci sequence and the golden ratio you can search on google for fibonacci and and learn more but i will talk about the trading aspect of fibonacci and in this tool we are using numbers from the fibonacci sequence all of these numbers are from the fibonacci sequence except for the 0.5 level the 0.5 level is there basically because it's a 50 retracement so if the price goes up from from this level to to this level and then comes back down to the 0.5 level that's the 50 retracement it's it's in the middle from from the bottom and the top is right in the middle so the 0.5 level is not the fibonacci number but all of the other numbers are taken from the fibonacci sequence and as i said before the fibonacci retracement tool can be used in a lot of different ways you can use it on cryptocurrencies you can use it on forex stocks you can use it on all different time frames and you can use it on bullish patterns and on bearish patterns and you can use it to decide where to enter trade and you can use where to decide where to exit the trade so it's a really wide tool and as it is with all technical indicators and tools in shorting and technical analysis there is no magical tool that will automatically make you a millionaire so you have to use your own skill and perhaps other technical indicators as well along with this but i will show you how i personally use the fibonacci tool in detail and i will also talk a bit about how i think other traders use it as well so basically what you do with fibonacci retracement tool is that you will look for a bottom a clear bottom in the chart and in this example i'm in the daily time frame on bitcoin and i think this is a very clear bottom and i will draw the tool from here just click once and then hold the mouse and drag it to the clear top this bottom is quite obvious and this top is quite obvious as well so now we have a range of different levels so the idea is that when bitcoin comes back down to this level it has retraced to the 236 fibonacci level if it comes down all the way here it has retraced to the 3a2 level and if it comes down here we have retraced to the 0.5 level and if it comes down here it has retraced to the 618 level and this is also called the golden pocket the range between the 0.65 level and the 0.618 level is called the golden pocket and that is the most powerful fibonacci level it's based on the golden ratio from the fibonacci sequence and it's also the most used level in trading and i will show you exactly why and give you a few examples so if the price comes down below the golden pocket zone the next level will be the 786 level and if the price comes down below the 786 level it's no longer called a retracement but is called a trend reversal and then if the price comes down all the way here we come down to the level one which is the same level as the beginning of the uptrend what i think is very powerful with fibonacci is that you will have these levels no matter if the price went up five percent or a hundred percent you can still use the fibonacci tool the same way for example here and here so you can use it in the same in the same way if the price comes down from this small trend and come down to the golden pocket zone here it has a big chance to go up again here and the same thing with the bigger trend if it comes down here to the golden pocket stone and then comes back up here it will also have a great chance of bounce from these levels so i'm using the fibonacci tool a lot for reference to navigate myself in the price action to know where we are at at the moment so here for example on the daily timeframe on bitcoin i can see that okay we we had a huge uptrend here and we made an all-time high on bitcoin and then we hit the 236 level and we broke down below it and now we haven't hit any of the other levels so if i want to go long here on bitcoin i might wait for the price to come down to one of these these levels and the most popular levels for the fibonacci retracement tool is obviously the golden pocket the 0.618 and 0.65 level the next most powerful level is this is the 0.5 level and the third most powerful is the 382 level but i'm using all of these levels in my own trading so the idea here with the fibonacci tool is that if bitcoin starts to crash down here it will probably bounce from one of these levels and if it comes down to the golden pocket zone it's very likely to bounce from this level but since fibonacci has been used in trading for a long time there is no secret and this is no secret tool that only a few people know about this is one of the most popular trading tools there is so everyone will be watching these levels when the price comes down to the golden pocket zone everyone will know about this level it's not only me or a few people like there will be hundreds of thousands of people noticing this level and there's a lot of trading bots that are programmed to go long exactly at the golden pocket zone and now with that said when too many people use the same trading strategy it would no longer work right and a lot of bigger whale traders will abuse the fact that so many people will go long on the golden pocket zone so for example let's say that bitcoin will start to retrace even more here and we are coming down closer to the golden pocket zone experienced traders and the very big whale traders they know that a lot of people will stack their long positions right here a lot of retail traders a lot of bots like everyone will try to buy the bitcoin on these levels so what the bigger traders do sometimes is that they will wait for the price to come down to the fibonacci level and when the price comes down to the fibonacci level they know that so many people are long here so they will short the crap out of bitcoin and force the price to go back down below the golden pocket zone and trigger a lot of stop losses and what they will do they will then buy the price right here and the price will spike from there so that way they can really squeeze out as much money as possible from this move so just um going long blindly on the golden pocket zone may not be a good idea and a lot of people will lose money doing that but it's still a very powerful zone and it's important to know about these levels because if you don't know about these levels there's a high chance that you will get wrecked if you're not watching out for the most used fibonacci levels so again a lot of traders will use the tool in different ways and for different purposes let's have a look at some historical examples you can so you can get a grasp of how it's been used in the past so i'll clear the chart out for now so we're still in the daily time frame on bitcoin and we can go back to further back on bitcoin so the most famous move on bitcoin is the 2017 bull run and this is an example where the golden pocket zone had a huge impact on the price so let's find a clear bottom on this chart i would go back here and i will use this button right here and drag it from there all the way to the top we can scroll to the right and extend it more to the right and look at this we had a huge crash on bitcoin from the previous all-time high in 2017 all the way back down to guess what the 382 level right here and first we had to liquidate some of the bulls to crash down further 14 with a week and then we went up 35 from there and then the price came down all the way from here to the 0.5 level and we did the exact same thing we liquidated some of the bulls on this level on this level minus 10 and then we came back up 25 but the most powerful move here was obviously the golden pocket zone we went down here and bounced on these levels and then we came back to the golden pocket zone and did the same thing here again liquidated some bulls minus 24 to shake out the retail traders and a lot of bots and then we moved to the upside by 40 percent and then the golden pakistan acted as a support multiple times here and we hovered around this level for a long time and then we finally crashed down below this level so this is one of the most famous examples on bitcoin where the golden pockets was used by bigger traders and a lot of experienced traders predicted this to happen and i saw some traders on on youtube and on twitter at that time who was trading this move and they were exactly right because they knew that that the golden pocket zone was a big support level while most retail traders didn't notice this level at all but this is just one example if we look at the history on bitcoin we will find hundreds of these examples and we can also use the fibonacci tool in a beer market in an uptrend you will use the fibonacci tool from the bottom to the new high like this but in the bear market or in a big drop you can use it the other way around so you can take the tool and drag it from the top instead and drag it to a new bottom and then we will use the fibonacci levels the opposite way so this time instead of using the golden pocket that's support we can use it as a resistance and if the price comes here we can actually short from here and the price is most likely to to act the same way but yeah completely opposite so let's see if this was true for bitcoin as well if we drag the fibonacci tool from this top over here to this swing bottom right here so this top to this bottom and guess what do we have a bearish golden pocket here yes we do so now the golden pakistan acted as a resistance and the bitcoin price came and hit the golden pockets on exactly here and then dropped down 69 percent from there so the golden pocket zone is indeed a very powerful level that you need to use when you're trading even if you don't trade based on the fibonacci levels you need to you need to know about them and you need to know how they work let me show you a few more examples on the bearish scenario so let's go here to the all-time high in 2017 and use the fib tool from this high over here to this swing bottom right here and then extend it to the right what do we have we have a hit you can see if we zoom in here you can see here that we hit perfectly the golden pocket zone and retrace down 27 and then we came back up and we had a small bull trap and then we went down again 58 or more percent here so once again we had a huge reversal on the fibonacci level and look at this if we take the fibonacci 2 from this top right here to this bottom right here we can use the fibonacci tool on smaller moves as well we have a perfect hit on the golden pocket zone and then came back 10 and then we came back up tested it again and we came back down over 40 percent and let's do the same from here from this top right here to this bottom right here we had once again a perfect hit on the golden pocket zone and came back down almost 30 percent and again we can use it from now from this top to this bottom right here and zoom in and guess what we had a perfect hit on the golden pocket zone and came back down 17 and now we can use the tool from this top right here to this bottom and this was the level that everyone was watching because we saw this history with the golden pocket we hit the golden pocket here we hit the golden pocket here we hit the golden pocket here and we hit the golden pocket here so now based on that history people were watching these levels very carefully from this top to this golden pocket zone and everyone was talking about it and i remember this day so many people stacked their short positions on the golden pakistan right here and guess what the whales did they pumped the price 12 percent above the golden pakistan and then they shorted it at the top and they made a profit at 18 in just a few days and after that the price crashed down 57 so the ways made a lot of money here in this bear market and we can even use it on smaller moves so we can take it from this top now to this bottom and extend it here and what do we have we have a hit on the golden pakistan with the small bull trap at two percent and then we crash down 17 percent and it goes on and on and on so this is one of the most powerful tools and we can use it in bull markets and in bear marks let me show you a few bullish examples as well if we go back down to the history of bitcoin here we can look at this bottom right here drag it from to this top and what do we have we have a perfect hit on the golden pocket zone and we went up 44 and this was in 2014 guys we can use it here in 2016 from this bottom to this top and we had a perfect hit on the golden pocket zone and we went up 40 percent and and more but let's look at some more recent example where we are at now today on bitcoin it's 2021 april here and we had a huge bull run right here so how could we have made money this year with the golden pocket zone if we use the fibonacci tool from this bottom right here to this top right here you can see that we had a perfect hit here on the golden pocket zone the 25th of march and we went up 20 percent from there but now i'm only on the daily time frame and when we are on the bigger time frames like the daily we don't have opportunities to use the golden pocket zone more than a few times per year or a few times per per month so i'm using it even on smaller time frames let's go down to the hourly time frame on bitcoin and we could have used it here from this bottom right here to this top right here you can see we had a perfect heater with a small trap at zero point four percent and then we went up five percent from there we can even use it on smaller time frames as well let's go to the 15 minute time frame as an example and we can write from from this bottom right here that's that you see here to this top and what do we have we have a perfect hit on the golden pocket zone and we went up over one and a half percent from there we can also use it from this bottom right here to this top right here and we had a perfect hit with the small week down 0.4 percent and then we went up three and a half percent and we can go back in history and look for more examples like this for example this button right here to this top over here and we had a perfect hit on the golden pocket zone with the small weak down 0.4 percent and then we went up over one percent and yeah and i can go on like this we have a lot of examples in the bitcoin history both on the higher time frames and the lower time frames and both on the bullish direction and also in the bearish direction so how other traders will use this tool is they will either use it to decide where to enter um a day trade or a swing trade and even to decide where to enter on a long-term investment to get a good entry and people are also using it to find resistance for example if they want to go long let's say that let's say that i want to go go long right here because i think let's say that that i saw bitcoin starting to rally here and i want to go long because because i think that the price will go up what i would do here and a lot of other traders as well they will use the fibonacci tool from this top right here to this bottom right here and they will find out that we have resistance on bitcoin here that this might be a dangerous level to go along i use this all the time to decide when not to go long so for example let's say i look for um for a long here or here i know that a lot of people will short here and take profit here because we have this resistance from the golden pocket on the bearish side so i would wait for the price to to break the golden pocket resistance and then go long when i know that it has broken that resistance line i see so many traders going long because the price is showing a bullish sign and they go long around these levels and then they wonder why the price dumped on them suddenly but that was because they they went long too close to a bearish golden pocket zone so that's something to always keep in mind when you enter a trade you always must know where are the supports and where are the resistance lines if i'm about to take a three percent long position i want to know that i have three percent without resistance on my way and if i would go long here for example i would not have three percent up i would have a huge resistance before i can take my profit at three percent so this would not be a good trade entry the same thing goes with shorting for example here if i was looking for a short i would never short around these levels above the golden pocket zone because we have a high chance to reverse to the upside so i use the fibonacci tool to to find good entries both for going long and for shorting and i also use it to decide when not to enter a trade and i just use it to navigate myself in all the price action so i know where are we at how much have we retraced and so on but when i'm using fibonacci to trade i always use it together with something else as well i'm not using it just alone for example now on bitcoin i know that we are in a bull trend at the moment so i am bullish for the next few weeks next few months so let's say that we have a bottom here and i drag the fibonacci from this bottom to this top and we would come down to the golden pocket zone i would be interested in the long but i also know that a lot of bigger traders will abuse this level so i would also be very careful so what i would do for example here if i want to go long i would wait for the price to come down and then when we are here i would wait for a reaction i would not just simply buy here i would i would wait for the price either to bounce here or to break down here and i would wait for a few hours and then make my trade so i would let the whales shake out all of the long positions here and i see some high volumes and the price action is very bullish i might go long if i feel like it would be a good trade but on the lower time frames not as many people will watch these fibonacci levels so let's say i'm bullish on bitcoin and we are here right now i would use to fill up fibonacci 2 like this i would drag it from this bottom to this top and since this is not a big fibonacci level this is a small one i would feel comfortable to just put my order here and go along right away because even even if we have a small retracement to the downside for example minus 0.4 percent that's not a big of a deal because i would have my stop loss at minus two percent and then i would take profit at two or three percent right here so on smaller time frames i'm more comfortable to go along directly on the golden pocket zone but on bigger time frames i'm very careful and i always use a stop loss at two percent no matter what trade i take because i don't want to be in a trade where i where i go long on on the golden pocket zone without the stop loss and the whales push the price down minus 20 and i'm sitting there well without the stop loss so it's very important to know how to trade these fibonacci levels you cannot just trade them blindly you have to have some experience and you have to do some back testing to know how you should use them so i hope you have a better understanding now for how i use the fibonacci tool in my trading again it's one of the most powerful trading tools in my opinion and i use it every day even if even if i'm not using it blindly for my entries i always drag it in the chart to get a feel for where we are at in the market if you have any questions about this video and the fibonacci tool you can write a comment down below and if you haven't seen this video make sure to check that out right now that's it for now see you next video peace out you

Channel: Joel on Crypto

Views: 17,917

Rating: 4.9608803 out of 5

Keywords: fibonacci retracements, fibonacci retracements crypto, fibonacci trading, fibonacci trading strategies, fibonacci, fibonacci day trading, fibonacci swing trading, fibonacci scalping

Id: i5ShvlEUkqc

Length: 23min 55sec (1435 seconds)

Published: Sun Apr 11 2021