Education

The Fibtory of a asset Bitcoin

Updated

First, this is not to give you financial advice on when to buy or sell. It has proven a strong indicator for me over the history of bitcoin.

It is a lot of colors to some but, Fibonacci always has a way .

This is to discuss Bitcoin as its chart solely show. I am not bullish on any market like this but, I will trade on what I see within the charts

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To start This is a setup I have used longterm to define strong buy-sell zones and i will explain here how to use/ read these zones is pretty self-explanatory. The tool being used here also is the Pitchfan

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SO to define each colored zone lets start with the " Red zones" These have been proven to be the strongest of any zone to either buy or sell it has only reached the buy and sell once for each but, they are the extremes of an extremely strong zone

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of course, the bottom one is a bit harder to see but its the red zone well zoom in on it in a second but, these two have proven to be our absolute strongest buy/sell zones with the sell being near 16-18k ish and the buy under 1k . History has shown once these levels hold they are extremely strong indicators lets investigate the very early days for example.

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this is the first but a very early example and how I myself use the fibs so it's not just about buy since it's at that level but more seeing it support the strong buy/ sell zones here's a prime example

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so you are in our buying zone but since its such a low tf maybe here 1-2 weeks if that. this is a basic idea of the setup we first bounce on the first red marking. we did, in theory, test the upper and reject but we would be buying with. We then retest and reject which would be a buy and a sell in the short term which we will apply to our longterm theory.

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This is a prime example before we go over how powerful this was on our move up to near 18-20k but, just because we are in a zone it doesn't mean buy since we are buying with very low confluences these are solo extremely strong zones but we need hh/ hl too. or ll/ lh

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so just because we dropped yes, in theory, we would have made more buying lower of course but, if u want the confluence of the move buy within support on these zones lets dive into the move up

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So this is the move up let's take a look and how to really read/ trade these zones.

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so to start after many many months we re-entered our red zone so we shot up (HH) one the wicked under the red zone (HL) one. but, we re-enter the zone and we go higher (HH) and retest it with an extremely strong wick here or even the second HH break this is ur true buy signal since this zone has been proven and broken.

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next, let us look at our first impulse

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so we have to think objectively also while we are analyzing since we do not know 20k is our future but I will be naming some of these fibs as b1-b4 for ease of following they are typed on the next screen

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so the first impulse lets look as we discussed we created a hh/ hl on our red extreme zone. looking back from now to then but, at the time we had low data to know that of course

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next comes our impulse we start from b1 and get rejected near B3 and we do not quite make it to b4

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so this is to show us how we would have followed this objectively without knowing the true top so we buy after our red zone hold on b1 but, then we see a reject on b3 (top). so we would have traded this with 2 stops either under our buy near the b1 dotted line near the red zone. or we would of had a stop to exit in profit under the bottom of b2 (bottom)

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so we have a lot of movements from b2 -b3 but we never would have triggered either of those stops. so this is what I like to call red ( level 1 buying) B2 (level 2 buying) B3 (level 3 buying ) and B 4 (level 4 buying ill get more into these at the end to understand how they impact ur profits.

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so we continue up and we broke all the way straight our of our b4 zone so we are now getting more buyers some would start to buy at the top of B3 entering b4 zone the one thing to look out for these buyers if we look at the wick near stop triggered for some this is where the levels come in so the higher the levels you buy the higher the risk you present and a lot of here b3-b4 buyers were stopped out.

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so before we watch the big things in this move we need to review and go over a few things in this method so to start we have 5 zones on each buy sell side (b1)b2) (b3)(b4) (RedZone)

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We also have a midline this is just the red line to define the middle its the one labeled midline

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so we have our bottom b1-4 and our upper b 1-4 but what does that make the grey area near the midline so this is going to be our most violate zone in this if you buy at the very start of the grey zone you are buying into the highest movement zone

The lower the b aka B1, B2, B3, b4 the lower the movement of the zone and the higher the level the higher of risk buyers put them at that's why the red zones will be true to be the extremely profit zones but near the potential top/ bottoms

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we next break out of our key buying zones and bounce off the midline and keep buying higher this is where stop losses take place some who placed them under the midlines would have been stopped out the theory in this is once it breaks the b4 you do not sell until the next b1 the sell zone so buying within the buying zones are key to follow this strategy

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on our next move up we see the midline bounces and the new b1 entry this is where you start selling you may say well it hit 20k but that goes against the theory b1 is a good sell sure, b2 very good b3 good, b4 good and red insanely good. We now enter what is ur profit and what is your entry.

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you will start to notice the number of wicks we see here just barely entering under our zones you have them in b1, b2, b3 but b4 holds so this is where you have to be subjective and buying in our initial buy zones let you ride it out over the. This is where the high-risk high reward traders who trade red to red trade and wait but once it breaks the midline down they exit with-profits but, lower than scaling in our theory of start selling in b1 and buy in our of course b1-b4

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now we can play this on the short side sure you could have started in b1-b4 but again these zones are not the only signals

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again everything is about viewing the situation you prob shouldn't short b1-b4 since its making new highs each candle

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but look at our yellow line I drew we hit our red zone and made ll this if you were looking to short a string short zone

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we have so many optional short term plays on the way down but, once the midline breaks is when the trend goes heavy in reverse

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the big importance to take note of is we bounce a lot but the closer we get to the midline the weaker these bounces will become. notice the midline gaps start off big-hitting B2( top ) to start to barely getting into (b1) and not even b1 this is what we call a switch about to happen and again once we enter our grey zone we will go down

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again let us take note the midline was made into resistance not support the trend truly swapped but we know the sell/ buy zones already the grey is heavy movements but high risk

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midline becomes resistance we are back to square 1 let's dive back in deeper

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again is b4 a good buy sure b4 is a good buy is b3 a good buy, of course, is b2 yes and b1 absolutely and red zone if we make it, yes but we need a signal too

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b4 dives to b3 we have our bottom support its a start

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look at our move up and b4 support holds it fails to break under

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big red wick but we keep our b4 and move up

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again grey zone not a buy signal but we move up short term traders get triggered around the midline target but we know the theory

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what do we see a midline break we go bull big move up again what do we do now well b1 a good sell b2 a good sell b3 a good sell and b4 a great sell and red zone a great sell

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look we hit our b1 bottom and highest near b1 top again b1 is a good sell b2 is a great sell and b4 is a great sell so we should sell at every zone and what happens next

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we hit our b2 bottom bounce back in and retest the b2 bottom both zones always a strong sell the grey zone should be ur adjusted stop as we move up

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next high we fail to move up to even b2 bottom it's a sell b1 still a strong sell.

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where do the bears brings us straight to the midline they want to switch the trend huge candle

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we have midline consolidation and the bulls know they must sustain that midline as resistance not support

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must not *

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our midline will define what's next but we know what has happened every time we hit the grey zone

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will b4-b1 be strong they always are

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as it stands once that midline becomes support wait for the sell and once it becomes resistance wait for the zones to buy

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midline is coming into play watch it over the next few days

once it breaks if ur in shorts 9k+ enjoy if ur looking to long watch the zones and be patient

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still working today guess where we are headed next

Mr_Dyor

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