FIBONACCI retracement Tutorial

[gunhell16]

Hello and good day to everyone! This time I will give a guide on how to use Fibonacci retracement. A powerful tool that will surely help us or anyone in trading because it is very simple and available on all platforms. If you want to know where it is used or if it is effective,
What is the Fibonacci retracement?

This concept is derived from the Fibonacci Sequence, which was invented by Leonardo Fibonacci, an Italian math expert, in the 13th century. And the Fibonacci Sequence is the sequence of numbers on a consistent basis, an example is in the picture below:

The reason is that almost everything in the world is associated with Fibonacci. That's why advocates think that the Fibonacci movement is possibly also related to this. Because in any market, the price does not run in a straight line, Instead, there is often a pullback or retracement.

But how do we know how far the price pullback will go? And this is where the Fibonacci retracement comes in.
On any trading platform like Bitget, Binance, Bybit, and other exchanges, we have a Fibonacci tool that we can use. This is what it looks like:



But before we can use it, we need to identify the market structure first. We are looking for a swing-high and swing-low, and the market must be trending because we don't see anything like that in the trading range, and normally the price is just equal, like in this picture below.



What we see in the picture is the latest swing-high and Swing-low, the swing-high is the newly formed price. Now Fibonacci will be used this time from the Swing-Low, as in the image below, and you will drag it to the Swing-Hi, as in the image below.



We can see in the Fibonacci retracement in the picture that it has levels. But we often don't use the others. We only have to pay attention to these 3 levels, which are 38.2, 50.0, and 61.8. This 61.8 is what they call the Golden Ratio because it is said to be the most reliable of those three levels. But for me, that depends on a case-by-case basis. That's why, in the example you see, he has already bounced to the 38.2 level, but if that fails, the 50 or 61.8 level can follow. But the chart does not always look like that.
Now, let's look at the downtrend market.



Now we can see the levels at which the price can be rejected. Take note, normally, when the trend is strong, it often bounces at 38.2 levels or even 23, but as the pullback deepens and exceeds 61.8 levels, it means that the trend is weakening and it can go into a trend reversal.

The Fibonacci retracement is a powerful tool, but we cannot use it alone. Since we do not make decisions based only on what we see in the Fibonacci retracement, of course we need to accompany it with other confirmations. For example, we are trading with a trend that we use a moving average, support and resistance, and a reversal candlestick, but as I said before, Fibonacci retracement does not work all the time, so we still have to manage the risk of every trade we do because there is no perfect trade in each of the tools we use. So it is not surprising that many people find it difficult to understand trading because of the randomness that it shows, like what you set up yesterday was effective and the next day it was not.

That's all I hope this will help to everyone who wants to explore their knowledgeWHAT IS FIBONACCI RETRACEMENT?

[EarnOnVictor]

This is a nice article and explanation about the Fibonacci tool and I must say that it's a powerful trading tool that I've used several times with very good trading results on many trading instruments. But, only the patient trader could use this tool, not those who want to trade in the habits of the common indicators. I must also say that I agree with almost all you wrote here except a few, and one of them is that in my own experience, the number that would be displayed largely depends on the trading platform you are using. As long as a line is displayed, it's valid for support or resistance, and there are usually 4 lines between the top and bottom lines.

Trading platforms vary, which is why we should not confuse ourselves or our readers about the lines and how effective they are, all 4 lines do the job well. Also from what I noticed in recent articles online, writers are not helping with this clarification, they even contradict themselves in some cases.

Nevertheless, my trading platform has been so effective on this, and aside from the top (100.0%) and bottom (0%) lines as the case may be, the four sets of lines displayed are 23.6%, 38.2%, 50.0% and 61.8%. And unlike what some articles would say, all these lines are valid support and resistance levels that are dependable when read rightly.

Lastly regarding your remark about not using it alone, well, I will still tread cautiously about that as I like to use it alone to avoid confusion in my trading. I hardly use it now, but when I do, I only use price action to complement it in any case, and the result has been superb.

[benalexis12]

Thank you very much for this tutorial,  it is a great help to me and also to other community members here on this forum platform. Now, I had an idea of how to use the Fibonacci retracement. The only ones that I always use are the trendline and the candlestick. There are so many tools used in crypto trading in this industry that it can be confusing what is accurate to use in making an actual trade using tools like this. Now, this Fibonacci retracement is more familiar to me.

[hugeblack]

The Fibonacci retracement is a powerful tool, but we cannot use it alone. Since we do not make decisions based only on what we see in the Fibonacci retracement, of course we need to accompany it with other confirmations. For example, we are trading with a trend that we use a moving average, support and resistance, and a reversal candlestick, but as I said before, Fibonacci retracement does not work all the time, so we still have to manage the risk of every trade we do because there is no perfect trade in each of the tools we use.

I agree with you, your explanation is beautiful and you did not quote the images from the source, but adding more examples of how it is used in bitcoin trading, especially in predicting prices during the last period, will be useful.

Just as the Fibonacci levels are to confirm the trend, reading it with the moving average, support and resistance in addition to trading volumes will make your explanation meaningful and not like an isolated island or an explanation of a concept isolated from use in trading.

I am following this topic and it would be helpful if you added these notes.

[hd49728]

I don't trade much after a few years in cryptocurrency market, I realized that trading is risky and I should choose investment which is safer than trading and can help me increasing my portfolio value more easily as well as more safely.

Fibonacci retracement is basic in trading and if using it wisely, it can help for investment and our Dollar Cost Averaging strategy too.

Fibonacci Retracement for dummies

[Mr. Magkaisa]

      -     The explanation given by Op on this topic is excellent and not difficult to understand. And the illustration image you gave is also a bit strange because instead of the image from the source you gave, it seems like you took an image from the actual trade you are doing, right? So that's what you showed so that those who can read your tutorial can understand it more easily.

Because of the source image example itself, it seems difficult to understand. I hope Op can show an example of how to use the fibonacci retracement in conjunction with the moving average and other tools so that we also know that this method is not well understood.

[palle11]

I see that you have tried to do justice to the indicator called Fibonacci and that is a nice one. I still feel that it is a biase indicator because it doesn't really give you a natural balance on its own. I mean you have to draw it out or place it on the angle you want based on the price action and if that fails then you shift it again and that makes those levels to change. In other to say those levels are subject to changes and when price bounce off them, you have to readjust the parameter of the levels on the position that best suit the trader.

[gunhell16]

The Fibonacci retracement is a powerful tool, but we cannot use it alone. Since we do not make decisions based only on what we see in the Fibonacci retracement, of course we need to accompany it with other confirmations. For example, we are trading with a trend that we use a moving average, support and resistance, and a reversal candlestick, but as I said before, Fibonacci retracement does not work all the time, so we still have to manage the risk of every trade we do because there is no perfect trade in each of the tools we use.

I agree with you, your explanation is beautiful and you did not quote the images from the source, but adding more examples of how it is used in bitcoin trading, especially in predicting prices during the last period, will be useful.

Just as the Fibonacci levels are to confirm the trend, reading it with the moving average, support and resistance in addition to trading volumes will make your explanation meaningful and not like an isolated island or an explanation of a concept isolated from use in trading.

I am following this topic and it would be helpful if you added these notes.

If you want me to show you an example of a moving average using Fibonacci, I will give you an example. If you see a picture below,



This is a moving average example that you can see in this chart. I use a different confirmation using the moving average, which I will also accompany with Fibonacci.



In this uptrend market, you can see in the chart graph that it had a pullback, and to confirm my assumption or confirmation, I will accompany it using Fibonacci if it bounces in the area of the moving average.



Now, you will also notice that this Fibonacci retracement area in this picture is at 38, 50, and 61, which only means that we can take a long position.
Now, I will use the Fibonacci retracement on support and resistance, as you can see in the picture below.



It is good to use support and resistance if the market is up trending, like in the actual scenario you see, because through this there is swapping, and the former resistance when it is broken will become support. So this time we can use the Fibonacci retracement, like in the picture below.



So this time I'm using Fibonacci to confirm the continuation.

[jeraldskie11]

If the new high breaks the previous high, it means it is valid. As we can see in the chart above, I'm not sure if you merely put the swing low in the wrong location by accident or if it is your swing low, because the market is going sideways before making a new high, which is what we call Choch. It occurs when a strong low or high is broken, which is a sign of a reversal. In this example, I merely choose which swing low should be in the lowest low on the chart. I know we have different market analysis, but if we put swing high and swing low appropriately, we can make the best use of Fibonacci retracement.

[dansus021]

Not gonna talk much but Fibbo 0.5 and 0.6 is crucial guys I seen a lot personally.

So when price hit fibbo 0.5 you can see either breakout or pull back is gonna happen soon. when price already break 0.5 and start to 0.6 the price is usually tend to move to next fibbo 0.7

[Odohu]

The Fibonacci theory is one of the most powerful tool known to man. Many naturally occurring phenomena follow this pattern.

How I apply this is same as you have explained: draw the Fib from swing low to swing high and wait for price to hit the  50% to 78% region, then I buy. The region above the 50% is called the premium while the region below the 50% is called the discount. So, we buy at discount and sell at premium. This was my practice before I started using DCA.

Bitcoin is currently at discount and the best action now is to buy.

[palle11]

How I apply this is same as you have explained: draw the Fib from swing low to swing high and wait for price to hit the  50% to 78% region, then I buy.

Does that mean fibo has no specific application of it because from this point it means someone else could draw it upside down or different from the way you have explained it. But what will happen if the price didn't hit those areas you pointed out and reverse again to continue direction already following, what will happen in that time? This is a very technical indicator to use, it would would have been better if it had a determined area of drawing or use because from what it is, anyone can decide the way they want to draw it depending on what they feel.