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A Comprehensive Guide to Fibonacci RetracementsHello traders, in this post, we will be going over one of the most commonly used tools in the equities (stocks), forex (fx), and cryptocurrency markets - the "Fibonacci Retracement". For a better viewing experience, please view this on your desktop/PC, as the mobile and tablet versions of the charts are harder to read. Although I have briefly touched on how to use the Fibonacci Retracement tool in my previous Elliott Waves series, we are now going to go over it in depth, and talk about how this tool can help you find entries and exits within an existing trend, which also helps identify whether you are in a bullish or bearish trend. The Fibonacci Retracement tool, although widely used by many traders, is almost always not correctly used by new traders. Most traders will often connect the wrong points, indicating the wrong Fibonacci retracement levels. Here, I will be explaining the proper way to use the Fibonacci Retracement tool in a very simple translated friendly guide in one guide. ------- What Is the Fibonacci Retracement? Fibonacci Retracements (Fib(s) for short), are a set of 'ratios', defined by mathematically important Fibonacci sequence. This allows traders to identify key levels of support and resistances for price action. Unlike other indicators, Fibonacci retracements are FIXED, making them very easy to interpret. When combined with additional indicators, Fibs can be used to identify potential entry and exit points with high probability to trade on trending movements. Fibonacci retracements are used to indicate levels of support and resistance for a stock’s price. Although they are similar to moving averages in this respect, Fibonacci retracements are set by the extent of the previous bullish or bearish run and do not change each day in the current trend as moving averages do. Therefore, it can be significantly easier to identify and anticipate support and resistance levels from Fibonacci sequences. How Is the Fibonacci Retracement Calculated? (You don't need to calculate it yourself - It's already done for you!) Fibonacci retracements are based on what is known as the 'Fibonacci sequence', where each number in the sequence can be added to the previous number to produce the following number within the sequence. Now, you might be confused here, but don't! - I am just explaining the concept on how it's calculated. You do not need to personally calculate the actual sequence of the Fibonacci Retracement, as everything is already pre-determined and calculated within the tool itself on TradingView. To put it simply, dividing any number in the sequence by the following number yields 1.6180 – known as the "Golden Ratio" – while dividing any number by its predecessor yields 0.6180. Dividing any number in the sequence by two positions in advance yields 0.3820, while dividing any number by a number three positions in advance yields 0.2360. These ratios emanating from the Fibonacci sequence are found throughout nature, mathematics, and architecture - such as flowers, buildings, and so forth. Yes, if you search for Fibonacci sequence examples, you can find these within daily uses, not only in trading. Now, let's get into the meat and potatoes. Retracement levels for a stock/cryptocurrency are drawn based on the prior bearish or bullish movement. Don't forget this - you need to know whether you are in a bullish or bearish trend. Is the stock or coin going up? or down? To plot the retracements, draw a trendline from the low to the high (also known as the swing low to the swing high) within a continuous price movement trend – Fibonacci retracement lines should be placed at 61.80%, 38.20%, and 23.60% of the height of the line. Again, these numbers are already calculated for you within the tool itself. In a bullish trend, the retracement lines start from the top of the movement (i.e. the 23.60% line is closest to the top of the movement), whereas in a bearish movement the retracements are calculated from the bottom of the movement (i.e. the 23.60% line is closest to the bottom of the movement). How to Trade Using the Fibonacci Retracement Once you have drawn a set of Fibonacci retracements on a chart of your liking, it is possible to anticipate potential reversal points where support or resistance will be encountered. If the retracements are based on a bullish trend, the retracements should indicate potential support levels where a downtrend will reverse bullishly. So to put it simply, the pre-determined Fibonacci levels, should in theory and practicality, act as resistance. If not, there is almost 100% certainty, even if the support/resistance is not held, there will always be some form of price reaction at each Fibonacci level just based on the Market Psychology movements. If the retracements are based on a bearish movement, the retracements should indicate potential resistance levels where a rebound will be reversed bearishly, which is the vice-versa situation for the bullish movement trend. The most common reversals based on Fibonacci retracements occur at the 38.20%, 50%, and 61.80% levels (50% comes not from the Fibonacci sequence, but from the theory that on average stocks retrace half of their prior movements). Although retracements do occur at the 23.60% line, these are less frequent and require close attention since they occur relatively quickly after the start of a reversal. In general, retracement lines can be considered stronger support and resistance levels when they coincide with the overall trend, meaning, that if you know that you are in an established bullish or bearish trend, you will most certainly get some form of reaction at the most common reversal levels within the Fibonacci level, which is shown in the image below. Whenever applying Fibonacci retracements, keep in mind that retracement lines represent only potential support and resistance levels, they are NOT 100% set in stone – they represent price levels at which to be alert, rather than hard buy and sell signals; however, they have HIGH PROBABILITY. It is important to use additional indicators, in particular MACD, to identify when support or resistance is actually being encountered and a reversal is likely. The more that additional indicators are pointing towards a reversal, the more likely one is to occur. Also note that failed reversals, especially at the 38.20% and 50% retracement levels, are common.
BITSTAMP:BTCUSDEducation
by XForceGlobal
76
BTCUSD H4 neutral There is an H4 13 CCI tlb short signal on big red bar,which completed expected zigzag down to retrace at east 38.2%, but had to run farther downto the 50smma magnet. This 38.2%/50sma sandwich area is not a sure place to short, because the 13CCI triangle apex is still above 0, which favors Up. Even if price penetrates below the 50sma, most likely it would go back up to it, so there would likely be a safer place to short. Watching for that befor S, and watchiing for another CCI tlb of any down trendline for a Long. Staying safe. You know what to do. Don't wait for me to post because I can't check mkt often this week & next
BITSTAMP:BTCUSD
by nicker
2
BTCUSD H4 neutral heads-upsLast post warned likely bounce up off 50sma. There was indeed a 13 CCI tlb Long signal shortly after and ran up $2000 to retest swing high. I held off posting not wantingto overtrade, but as price pulls back possibly to fib. 38.2% retracement, if it bounces up from there I'll take that long signal. I have not marked it on chart, so look at the fib retr. tool there. So far there is no 13CCI divergence, suggesting more upside. To avoid overtrading, consider breakout trades long above swing high, or short below the 50sma
BITSTAMP:BTCUSD
by nicker
1
Update- see previous chartsCHPT respecting its long-term uptrend line, Bollinger bands squeezing, buyer volume starting to pick back up again, will be looking for a breakout broader market conditions permitting. Bullish, just some FIB levels along with some RSI-based supply and demand zones to keep an eye on. CHPT has been selling off after their offering but still has held its long-term uptrend line. Looking to pick up shares but patiently waiting at the moment for it to find some support. Just some FIB levels to keep an eye on- - Nearing the oversold range and has been selling off since they announced a public offering - Broader markets pulling back - Good long-term entries
NYSE:CHPTLong
by jacobosiason7
EVK "Fibbin" again?EVK hasn't been a stranger to big moves quickly. Nor has it been a stranger to the 382 Fib level either. Now the second time it's tested this area, EVK continues to fail to break and hold above it (as of right now). While there's still a clear uptrend with higher lows, there's a pretty important level that may be of interest right now which is the 50 fib line. It's in "no man's" land after today's spike and looking for some solid support is going to be important for longs. If it does settle around this level, it would be the first time it's established support above the 618 fib line in quite some time. We'll have to see how much follow-through, if any, is in play heading into August. "The main reason for this move comes as the China-based clothing supplier and retailer announced that it would be repurchasing roughly $5 million worth of its shares. 'We believe our stock is a good value, and the Board’s approval of this stock repurchase program is recognition of the long-term prospects in our Company’s intrinsic value and the undervalued price of our stock. Repurchasing stock underscores our commitment to enhancing shareholder value and demonstrates confidence in our business.' - The CEO of EVK, Mr. Yihua Kang. For some added context, Ever-Glory International is the first Chinese apparel company to be listed on a U.S. stock exchange. It offers several brands that cater to middle-high end customer markets. As a vertical company in this market, Ever-Glory is able to control all aspects of its day-to-day operations." Quote Source: 4 Hot Penny Stocks to Watch as August Turns Bullish
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by PennyStocks101