XAUUSD
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OTE /Optimal Trade Entry
When a price has bottomed or topped in a certain area, we usually make a nice and deep retrace before going further in the other direction. This is called the optimal trade entry since it's the ideal spot to enter a trade for high RR trades.
To be more specific, price retraces to the area between the 61.8% and 78.6% Fibonacci levels on your Fibonacci tool. With 70.5% being the middle of that and essentially being the sweet spot.
Now, these Fibonacci levels don't magically work everywhere. Like every other concept, you have to combine this with other concepts to work.
The OTE is an essential tool to find high RR entries. The reason for this is that when price retraces this deep, you're close to your invalidation or stop loss, and so you automatically get high RR trades because you enter close to your invalidation level.
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