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Fibonacci

How to do accurate entries using the 50% fib levelThis strategy will require you to be able to distinguish between the impulsive move and the retracement since we only apply the fib retracement tool to the impulsive move. What you do is just lay your fib from the body to the body (not the wicks) then identify the 50% retracement level. Now if you're an aggressive trader you can set a pending order or just execute an instant entry once price reaches your 50% retracement level. On the other hand if you're a less aggressive trader, you will make a decision based on what price action will reveal at the 50% retracement level. I'll leave it to you to decide what kind of trader you are.
FXOPEN:XAUUSDEducation
by JayForexAcademy
2
SP500 Fib Modeling IIn physics, when charged particles are fired at double slit, chances are they will leave 2 marks as they would go through 2 slits. Those waves of uncertainty crash into each other and interfere, merging and canceling each other out just like any other waves. Then, when an electron's wave hits the back screen, the particle finally has to decide where to land. Slowly, electron by electron, the wave pattern builds up. Our expectations can be evaluated by checking the results. But results can change by simply witnessing the process closeup. An intervention of consciousness can alter reality. Particle as we know started behaving like wave as if they were aware of being watched. So each time particle is fired, it becomes a wave of potential as it approaches the slits and through the quantum world of infinite possibilities finds its final destination. As a result we get interference pattern , the mark that commonly shared by targets of particles after going through such chaotic journey. The electron can go through both slits as wave of potential, then it collides back forming particle hitting the layer! Act of additional measuring by repeating experiment can make the particle act normal again with two stripes pattern. From this I'd outline the sharp changes in behavior as well as shift in entity itself. The collapse of wave function caused by particle's awareness of ongoing surveillance can in some way mean that matter is a derivative from consciousness. And these are the building blocks of universe, where things can simply appear and vanish without evident reason. Removed irrelevant fibs: Fibonacci Ratios found in regular Retracement as well as TimeFibs fit the parameters of Wave Function. The overlap of Golden Ratio with real life example of interference pattern formed by two slits using regular white light as a source. I was pleased to acknowledge that Fibonacci numbers with its known features are also applicable in Quantum Mechanics, when we're dealing with the odds, probabilities and forecasting. This observation actually adds more credibility to FIBS and explains my long fascination over price behaving differently near fibs in one way or the other. Wave-particle duality is an example of superposition. That is a quantum object existing in multiple states at once. An electron, for example, is both ‘here’ and ‘there’ simultaneously. It’s only once we do an experiment to find out where it is that it settles down into one or the other. Today we know that this ‘quantum entanglement’ is real, but we still don’t fully understand what’s going on. Let’s say that we bring two particles together in such a way that their quantum states are inexorably bound, or entangled. One is in state A, and the other in state B. The Pauli exclusion principle says that they can’t both be in the same state. If we change one, the other instantly changes to compensate. This happens even if we separate the two particles from each other on opposite sides of the universe. It’s as if information about the change we’ve made has traveled between them faster than the speed of light. This makes quantum physics all about probabilities. We can only say which state an object is most likely to be in once we look. These odds are encapsulated into a mathematical entity called the wave function. Making an observation is said to ‘collapse’ the wave function, destroying the superposition and forcing the object into just one of its many possible states. Arranging the fractal by phases with fibonacci on both price and time scales is an alternative approach to the known quantum mechanical solutions to finance, thus relying on a postulate that quantum mechanics applies to finance unchanged. For market prices, it is important to note that nowadays we are looking at a lot of noise when handling them. In financial markets we are dealing with infinite possibilities emerging patterns which also creates chaotic process just like in subatomic levels. On molecular scale, we know that elements don't just react without a reason. It can bond with other elements if it shares corresponding properties of valence. When it matches the electron configuration, it bonds into new compound generating geometric shapes like hexagon of new chemical structure, like shapes of puzzles unite to resemble a bigger picture. Similarly, as market makes a move, it determines next candle's dimensions. If previous candle hypothetically had different properties, then the current candle wouldn't be the same it's forming right now. I'd say even the slightest change can significantly delay or change targets and outcomes. Price action also rhymes with time cycles. Sometimes these cycles of different wavelengths overlap resulting in breakout with short-term rapid growth rate. To get an approximate idea of where price is heading to, we must carry out a thought process. Let's assume market is heading up. We know that chances of a rapid pump to establish new ATH in one day is very low. We assume it's rather going to start with gradual growth when breaking from cyclic entangled side trend. Imagine the candles are made out of metal string so you could touch it and play with it according to all laws of physics just like with a regular piece of metal wire in real life. Now imagine just grabbing the right end of it and pulling upwards to simulate shape unfolding into direction of your target... Nevertheless, various fragments of final structure would still carry its systematic shapes which were originally determined by the market. In both cases these is a psychological effect, almost convincing me, that the market path is predetermined by trajectories of EMA with intermediate arguments rather than by short-term direction of a wave a spike and collapses. And it's not about the overall performance of the economy or any other factors, market simply derives the path on the go like in multi-universe concept. The fact that >90% of people are losing is a result of sticking to the current market information noise and news. chances are market simply would have already reacted to the narrative even long before entries were placed. That's how fast things are happening. This happens when market is correcting to other "upcoming" more dominant arising fundamentals whether they are positive or negative. The curve of information distribution speed is vital concept which contributes to ignoring the naive need for information backup behind price moves. Many serious participants of the market are deaf to news. Whatever we receive, we must acknowledge that by the time we receive the news, millions of people already digested those them provided by some media company with their own angle in it. News trading is a very hysterical thing to do, unless you are among the first wave of investors possessing the information from real insiders. The lots and billions of entries in favor for the narrative are already locked in and they are waiting for the last remaining crowd to jump in to be kill them at 5th wave. Considering an accumulation should be after completing a fall. We must feel comfortable at places where the rest still feel fear in order to be able to beat them off due to averaging trades without blind faith. Modern approaches to stock pricing in quantitative finance are typically founded on the Black-Scholes model and the underlying random walk hypothesis. Empirical data indicate that this hypothesis works well in stable situations but, in abrupt transitions such as during an economical crisis, the random walk model fails and alternative descriptions are needed. For this reason, several proposals have been recently forwarded which are based on the formalism of quantum mechanics. In this paper we apply the SCoP formalism, elaborated to provide an operational foundation of quantum mechanics, to the stock market. We argue that a stock market is an intrinsically contextual system where agents&apos; decisions globally influence the market system and stocks prices, determining a nonclassical behavior. More specifically, we maintain that a given stock does not generally have a definite value, e.g., a price, but its value is actualized as a consequence of the contextual interactions in the trading process. This contextual influence is responsible of the non-Kolmogorovian quantum-like behavior of the market at a statistical level. Then, we propose a sphere model within our hidden measurement formalism that describes a buying/selling process of a stock and shows that it is intuitively reasonable to assume that the stock has not a definite price until it is traded. This result is relevant in my opinion since it provides a theoretical support to the use of quantum models in finance. Fibonacci ratios are another way of exposing the probability of future prices in respect to timing. Even when overwhelming majority of people expect growth after good news with obvious positive factors, price can fall and expectations of millions can easily be shattered by market in an action. Identifying patterns is a part of making sense of out of randomness. There is a logical parallel: If an observer can collapse wave function, same way the collective consciousness of market crashed the wave function of uptrend. This happens and quite often. Some people incorporate prime numbers to their trading systems. But of course I'd stick with fibonacci, because golden ratio governs chaos behind price swings as well as its time cycles derived from coordinates of fractal peaks and bottoms. I put tremendous amount of accent on raw data of candles. It doesn't just stop where it does, it is predestined to do it due to chain of cause and effect loop. New formed candles of particular metrics is a direct result of nearest historic candles and mathematical relationship shared between all of them. The way things are curved in nature and space, even exponential growth can be perfectly simulated with fibonacci sequence. Fib ratios are credible as they share and fit into concepts from fractal geometry and chaos theory as well as describing behavior of complex processes. A line simple line can be used to link of some recent buildup of systematic patterns to similar historic fractal echoing back into present. A properly observed shape can tell more words than any news article, as it passes through the phases of cycle. By documenting nature of short-term swings we can evaluate how market is determining the most efficient price having continuous stream of information, different opinions, events and other factors on the background can directly or indirectly shape the value of an asset. Patterns can tell whether collective psyche of the market feels distrust or approval of ongoing narrative and world trends are unfolding. It's quite easy to say "buy the dip" or "buy at the finishing stage of falling". It sure takes a good combination of decisiveness, discipline and being able to stick to your plan. But how can we be so sure that price will follow the direction after entry. To answer that question, I'd monitor the security with BSP - "Buying & Selling Pressure". During selloff SP is obviously over BP. We wait till SP loses momentum and declines while BP begins grow. This way we got ourselves interested. Then we examine the hypothetical entry by chain of logical confirmations. We actually need to wait for Buying Pressure to cross over Selling Pressure. IF bpma > spma is true, confirm with: volume > ta.ema(volume, 20) or ta.atr(10) > ta.atr(10) ta.ema(ohlc4, 13) >= ta.ema(ohlc4, 13) and ta.ema(ohlc4, 5) >= ta.ema(ohlc4, 8) and ta.ema(ohlc4, 5) < ta.ema(ohlc4, 8) bpma > bpma and ta.crossover(close, ta.vwma(close, 13)) stoploss = close - average(bpma, spma) If all of the conditions are met in a row, wait for correction to complete, see the Selling Pressure falling and enter with the next green candle. Meeting just 1 of these conditions would technically push me into placing a long order. However, I wouldn't do it without fabric of PriceTime scales interconnected with candle data by fibonacci ratios. Refracted EMA can also be a tool of choice to determine the levels support and resistance. Personally I'd go with fibonacci, because they are based on raw chart data instead of averaging with MA's and its derivatives.
AMEX:SPYEducation
by fract
11
The CoffeeShopCrypto Fibonacci Tool SetupWelcome to the coffee shop everybody once again. This is your host and baristo Eric and I have a number of strategies to put up for you but I realized that you guys are going to need some help with that. In a few of my previous videos you have seen me using my Fibonacci Retracement tool but the question always arises why does mine look different than yours. So I want to post this quick video so that you can have the information and the visual of what your Fibonacci tool should look like as well as being able to copy my settings into your Fibonacci tool. Make sure that at the end of applying these settings you go down to the bottom of the Fibonacci tool settings and you click save as then give it a template name because this is going to be used as a template setting so you can switch it on and switch it off. The purpose of setting your Fibonacci tool this way gives you a more clearly defined area of take profit 1 take profit two and take profit 3. So while the settings may not seem to make sense right off the bat, once you start using these strategies you'll understand more clearly what the settings are for. Fibonacci Retracement Tool Settings Trend line = on extend left / right = off Scale values: Column 1 0 GREEN 0.382 WHITE 0.5 YELLOW 0.618 YELLOW 0.764 ORANGE Column 2 0.88 RED -0.618 Green -0.25 Green 1 Light Blue Background = off Prices levels = on (values) Labels = Right / Top Font Size = 12 Fib levels based on log scale = off Under template click SAVE AS and name it "The Coffeshop"
Education
by CoffeeshopCrypto
18
Using Multi-Time Frame Analysis To Find Key Levels That MatterDo you find yourself drawing too many levels on your charts? Do you struggle to know which levels that actually matter for trading decisions? Do you wonder why price moves straight through some key levels and not others? This video will show you how to analyse a stock using Multi-Timeframe Analysis techniques to find the key levels that actually matter for trading, and how to quickly find the most important levels where price is likely to react.
NYSE:CCIEducation
by JoelWarby
How to use Fibonacci Retracement ⁉️ ‼️ Forex traders use Fibonacci retracements to pinpoint where to place orders for market entry, taking profits and stop-loss orders. Fibonacci levels are commonly used in forex trading to identify and trade off support and resistance levels. After a significant price movement up or down, the new support and resistance levels are often at or near these trend lines . Usually the price retracts to 50% or untile OTE (0.62, 0.705, 0.79) before another impulse movement occurs.
OANDA:XAUUSDEducation
by Snick3rSD
Sticking to stop loss is a must to do when ((BUYING the DIP))Opening a position without setting a stop loss is a big mistake and it can be disastrous when buying the dip ! Here, we show a tempting setup to open a long position in rectangle (1) . It is of course OK to go long in this setup in the hope of catching possible up coming up going wave shown in green. But without setting a stop loss? Not at all ! Followings are just two simple possible scenario which may happen: Rectangle (2) shows a scenario which may happen if lucky. Although it will bring us profit, believe me it bothers all the traders a lot emotionally. Lots of hopes and fears which makes us nervous. This not only ruin our current trade but also has a powerful negative impact on our next trades. Rectangle (3) shows a terrifying scenario which can whip out all our capital ! Please keep it in mind that " Preserving capital is a first rule of trading ". If you think this is an unrealistic scenario just take a look at ETSY, SHOP, SQ and ROKU. Be aware my friends : what we consider a possible abc form of correction can just be waves 1,2 and 3 of a larger degree wave 1 or A . This concept is shown on the rectangle (3) scenario. It is worth to note what is labeled as wave 1 or A in this rectangle is not end of down side move .There will be another at least same size down side move after a wave 2 or B counter trend correction. See the charts carefully to find out what is next after waves 1 or A. There are 4 major rules in trading : 1. preserving the capital 2. preserving the capital 3. preserving the capital and if successful then: 4. making profit. Hope to be helpful and good luck.
NASDAQ:TSLAEducation
by SaeedSajedi
12
Market Structure: The analysis we use to skip (and we shouldn't)Hi traders, today we want to explain why market structure analysis is as important as a good entry signal strategy. Note: For this article, we differentiate the entry signal from the market structure analysis. In some cases, the entry signal considers also the market structure but in these cases, we could easily split the set of rules into rules to define the market structure, and the rules to enter the market (entry signal). So we will consider it as two steps or phases. One of the most common mistakes (which I did a lot in my trading early years) is that traders tend to focus on finding the best entry signal, the SL level, and the target, which is great but is only half of the work. Only with this part and with proper risk management, you can be profitable. However, this is only the mechanical part of the trading strategy which, in most cases and especially if the entry signal is based on indicators, could perfectly be automated as these are only a set of rules (based on indicators or other technical analysis tools) that trigger the entry signal. What it is as important as the SET (Stop, Entry & Target) is the analysis of the market structure of each asset. By that we mean that we should know: - What is the current cycle of the asset? Where did the cycle start? - Is it bullish or bearish? - Is it impulsive or corrective? - When and at what level this cycle is expected to end? - Which structure this cycle has? - and so on… This is the part that was tougher for me to learn, and it is the part that requires more time and experience. Detect the subtle difference that very similar market structures can have and differentiating them will take you time. Do not misunderstand me, it is not rocket science, but it can be tricky. The market does not use to move on perfect defined structures we can easily identify, most of the time it can be difficult to detect these structures. We use the Elliot Wave principle mainly (but not only) to help us “find” the right market structure of each asset. How we see the Elliott Wave principle (EWP) in one sentence would be: It is a set of rules that help us to divide the market in impulse and corrections to know where and when each of these cycles has started and also to forecast when AND WHERE it is expected the cycle will end. It can sound not too much but believe me it is a lot. Even though the Elliot Wave principle (EWP) rules are perfectly defined, to apply them on the chart would be not 100% objective and, therefore, the same rules can be applied differently by each trader on the chart. This is why it takes more time to identify the right way to interpret and apply the EWP rules to the chart and this is the reason why it is the part that used to take more time for the trader to be proficient in. We see and use the EWP as a guideline or a map structure of the asset we are analyzing, (VERY IMPORTANT) we do not use EWP alone to enter the trade. We use it to know the structure of the asset and to infer the most probable direction that the price will take in the future. With EWP as the base of our trading strategy, we will use other analysis tools like the correlation between the different asset groups or the market dynamics to refine the assets that give us the maximum options of having a winning trade (after applying the entry signal strategy). Another very important point we want to make clear from the beginning is that we should be flexible in our predictions. We do have a clear view of the structure that we think the market is having at this moment for each asset. However, we need to be prepared to be wrong, by that we mean that we need to know and be aware of what are (if any) the other potential structure the cycle we are analyzing can have. This is why we will not enter a trade based on the wave count only and we need the other tools we mentioned before. Therefore, and to wrap it up for this lesson, EWP gives us a lot of crucial information that is the base of all our trading strategies. To summarize it and make clear how we use the EWP, we use EWP to: - Know the Right side of the market for each asset (Long or Short) - Detect whether the asset is in an impulsive or on a corrective cycle and its internal structure - Project the zone where the asset is expected to end the correction (to apply there the entry signal strategy) - Project the level where the impulse wave is expected to end (which would be different depending on the wave we are in) (Target) All these will help us to find zones where we can apply our S.E.T. (Stop-Entry-Target) rules to maximize the overall return of our strategy as it will increase a lot our Winning percentage. Have an amazing and successful trading day TRS team
Education
by TradingtheRightSide
3 FIBONACCI TOOLS YOU MUST KNOW 💡 Hey traders, In this article, we will discuss 3 classic Fibonacci tools you must know. 1️⃣Fibonacci Retracement Fib.Retracement is my favorite fib.tool. It is aimed to identify strong horizontal support and resistance levels within the impulse leg. We draw this tool based on the high and low of the impulse (from wick to wick) and it shows us POTENTIALLY strong structure levels determined by Fibonacci numbers. Common Fib.Retracement levels are: 0.382, 0.5, 0.618, 0.786. Once one of the levels is reached, wait for a confirmation before you open a trading positions. 2️⃣Fibonacci Extension Fib.Extension indicates strong horizontal support and resistance levels beyond the impulse. Similar to Fib.Retracement tool, Fib.Extension is drawn relying on impulse's high and low (from wick to wick) and it shows POTENTIALLY strong structure levels where the consequent impulses may complete based on Fibonacci number. Common Fib.Extension levels are: 1.272, 1.414, 1.618. Once one of the levels is reached, wait for a confirmation before you open a trading positions. 3️⃣Fibonacci Channel Fib.Channel shows strong vertical supports and resistances (trend lines) within the channel. The tool is drawn based on the trend line of a valid parallel channel (based on wicks) and it shows POTENTIALLY strong trend lines from where the market may retrace. The trend lines within Fib.Channel rest on 0.382, 0.5, 0.618, 0.786 Fib.Levels. Once one of the levels is reached, wait for a confirmation before you open a trading positions. Remember that Fibonacci's are simply tools in a toolbox. In order to use them properly, you need to build a trading system around them, test it and confirm its efficiency. ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
11
Jumping S-curvesIn this post, I will explain what jumping S-curves means and how you can identify potential S-curves before they jump . First, let's begin with the chart above (also copied below). This is a yearly chart of McKesson Corporation (MCK), a medical supplies company. As you can see in the chart below, this stock has been soaring over the past year despite most other stocks being significantly lower. Here is the performance of the S&P 500 over the same time period. Whenever I see something highly unusual in a chart, such as extreme outperformance, I check the higher timeframes to see what's driving price on a technical level. Below is the yearly chart for MCK. When I examine price action over a long time period, I always log adjust my chart. Below is the log-adjusted chart. Upon seeing this chart I immediately knew what was going on: the stock price jumped S-curves. I will try to illustrate below how I reached this conclusion. To begin, I drew Fibonacci levels from the last reaction low to the last reaction high on the yearly timeframe. The previous reaction low was the bottom of 2008 because that bottom was a Fibonacci retracement of some earlier reaction high, the reaction high is the top in 2015 because price did not surpass that high without first undergoing a Fibonacci retracement (to the golden ratio). As you can see above, from 2015 to 2018 the price retraced down to the golden ratio (0.618) on the yearly chart. It is often from this retracement level that the base of the second S-curve is created. (For simplicity, I only included the 0.618 Fibonacci level on the chart). Some may say that this pattern is merely a bull flag or pennant. (See chart below) Indeed, bull flags and pennants can be another way to visualize S-curve jumps. Whereas, on a deeper, more mathematical level, S-curve jumps are logarithmic spirals (approximated as Fibonacci spirals or Golden spirals). If you wish to delve deeper into logarithmic spirals, including the Golden spiral, you can check out this Wikipedia page: en.wikipedia.org These Fibonacci or Golden spirals are present on mostly every chart and they appear on mostly every timeframe (hence they are fractal ). One of the best charts you can use to visualize these spirals is the chart of Bitcoin. Below are charts of Bitcoin which attempt to show the endless fractal nature of Fibonacci spirals (or "S-curve jumps"). I've only illustrated a few of the spirals, but indeed there are numerous spirals. (I tried to do my best using the tools on Trading View to draw these spirals, but it can be quite hard to manipulate the curves perfectly to price action.) One may ask what about when price falls? That is obviously not an S-curve jump since the price is falling. Actually, when price is crashing it is usually just an S-curve jump, or Fibonacci spiral, on the inverted chart. Although I have not tested it with scientific rigor, I do hypothesize that Bitcoin's price movement is a series of infinitely fractal and competing Fibonacci spirals on various timeframes, including Fibonacci spirals on inverted scales. Price movement can be thought of as an infinite series of S-curve dilemmas where infinitely fractal S-curves, including those of which are inverse S-curves, compete to govern the next price move. Each dilemma is resolved when an S-curve reaches its inflection point, such that it governs price movement and price moves rapidly in that direction until it approaches capacity and faces its next dilemma. Those who know Calculus may recognize this chart. Indeed this is the graph of a logistic function. The mathematical terminology for an "S-curve" is sigmoid function . Here are some more interesting charts of S-curves (none of which is intended to be investment advice) Meridian Bioscience (VIVO) jumps S-curves on its yearly chart The U.S. Dollar Index jumps S-curves on its yearly chart The entire price action of Chinese EV Company (NIO) is an S-curve that just completed a perfect golden ratio retracement Japan's faces a population S-curve dilemma Citigroup underwent S-curve growth up until the Great Recession. Then it crashed or underwent S-curve growth on the inverted chart. In summary, price movement involves an endless series of S-curves or Fibonacci spirals. Identifying an S-curve on a high time frame before it reaches its inflection point and breaks out can lead to tremendous gains (among the most lucrative gains one can realistically make in the financial markets).
NYSE:MCKEducation
by SpyMasterTrades
22
FibonacciHello, Let us talk about 'Fibonacci.' On this chart: You will read about where it came from? Why do we use it, and where does it help us. Before we dive in to talk about Fibonacci Retracement levels and their use in trading, Let us talk about the origin of Fibonacci : It all started with rabbits. Yes, Rabbits! Fibonacci became interested in a strange issue in 1202. He wanted to know the outcome if he had a pair of male and female rabbits and defined behavior for their offspring. The assumptions were as follows: We have a pair of male and female rabbits that have just been born. Rabbits mature after one month. The gestation period of rabbits is one month. When a female rabbit reaches puberty, she must become pregnant. At each pregnancy, the female rabbit gives birth to one male rabbit and one female rabbit. Rabbits never die. Calculate how many pairs of this type of rabbit we will have after n months? In mathematics, the Fibonacci sequence or series is the following infinite sequence of natural numbers: 0,1,1,2,3,5,8,13,21,34,55,89,144,233,377,610,987,1597,... Take a look at this GIF, to get an idea of this infinite sequence: drive.google.com The Fibonacci spiral: an estimate of the golden spiral generated by drawing circular arcs attaching the facing corners of the squares adjusted to the values ​​of the sequence; by successively attaching squares of side 0, 1, 1, 2, 3, 5, 8, 13, 21 and 34. The sequence begins with the numbers 0 and 1; "each term is the total of the past two" is the recurrence relation that defines it. The elements of this sequence are called Fibonacci children. Leonardo de Pisa described this sequence in Europe, a 13th-century Italian mathematician also known as Fibonacci. It has numerous applications in computer science, mathematics, and game theory. It also appears in biological configurations, such as in the branches of trees, in the arrangement of leaves on the stem, in the flowers of artichokes and sunflowers, in the inflorescences of Romanesco broccoli, in the configuration of coniferous conifers. In the reproduction of rabbits and in how DNA encodes the growth of complex organic forms. Similarly, it is found in the spiral structure of the shell of some mollusks, such as the nautilus. Leonardo Pisano, Leonardo de Pisa, or Leonardo Bigollo, also known as Fibonacci, was born in 1170 and died in 1240. Long before being known in the West, the Fibonacci sequence was already described in mathematics in India in connection with the Sanskrit prosody. Susantha Goonatilake notes that the development of the Fibonacci sequence "is attributed in part to Pingala (year 200), later associated with Virahanka (about 700), Gopāla (about 1135) and Hemachandra (about 1150)". Parmanand Singh cites Pingala (around 450) as a forerunner in the discovery of the sequence. Now let us talk about Fibonacci in the finance world. You might use it too, as Fibonacci Retracement Levels. (As you see on the chart) The second law of technical analysis indicates that values move in trends, bullish or bearish. Once a trend has given sufficient signs of termination, either by breaking its trend line, confirmation of a trend reversal figure or any other valid factor according to technical analysis theory, the analyst contemplates the possibility of a setback. A pullback represents, in simple terms, a move in the opposite direction to the past trend. It can take the form of a crash in price after a bullish move or a rebound in price after a downtrend. Although the first could properly be called a retracement and the second rebound or rally, technically, the term retracement includes both. Within technical analysis, Fibonacci retracements refer to the possibility that the price of a financial asset will retrace a considerable portion of the original movement and find support or resistance levels at the levels set by the Fibonacci numbers before continuing. The above address. These levels are constructed by drawing a trend line between the extreme points of the movement in question and applying the critical percentages of 23%, 38.2%, 61.8%, 76.8%, and 100% to the vertical distance. Fibonacci retracements are used to confirm suspicions of a market movement. Levels of support and resistance can indicate possible bullish or bearish market trends and indicate to people when is the best time to open long or short positions. This means that Fibonacci retracements can be highly fulfilling for people who know when to use them correctly. Upon confirmation of rejection in the price, we will try to calculate the probable magnitude of the movement. In order to achieve this, specific percentages collected from the Fibonacci series are applied to the total magnitude of the previous trend. The percentages used are as follows: 61.8%: Also recognized as the Golden Ratio, or golden number, it is the limit of the result obtained from the division of an element of the Fibonacci series by the following number, as the series tends to infinity. 38.2%: It is obtained by subtracting 61.8% from the unit (1.000 - 0.618) 100.%: Equivalent to the total magnitude of the primary trend. Reversal percentages should be calculated after the end of a trend has been confirmed, never while the trend continues. Considering that trends are always part of a longer-term trend and, in turn, are made up of shorter-term trends, the question on which of these trends should be calculated as setbacks? There might not be a simple answer. We must calculate the setbacks on that trend that has given clear signs of termination in general terms. A weak trend may have a 31.8% retracement, while a powerful trend may have a 61.8% retracement before returning to its original direction. Some sources mention a critical zone of 33 to 38.2% and 61.8 to 67% instead of specific levels. Fibonacci retracements form an essential part of the Elliott Wave Theory. The most scathing criticisms against Fibonacci retracements are based on the random walk theory, arguing that there is no justification for assuming that price action has any reason to respect predetermined retracement levels. However, it is not suitable to use Fibonacci retracement all the time. There are a few downsides too: Fibonacci retracement shows only static price levels. It is unlikely to say that a specific cryptocurrency price will not pass or stay below predicted levels. Many external factors determine the price of a coin. They have to be taken into account when determining trading decisions. Fibonacci retracement levels are close to each other, so it is challenging for a professional trader to determine the accuracy from which to predict the value of a particular coin in the future. Suppose you're interested in using this great indicator. In that case, you can simply go on your TradingView chart and the dashboard, click on 'Indicators & Strategies' and search for Fibonacci and find the best one suited for you. Have you ever used this indicator? What do you think the pros and cons are? Let me know your ideas. Good luck.
Education
by ShawnMCR
19
Need something to learn? ✅Hello, Let's stop reading the charts for a while and instead learn how to read them. There are many indicators and strategies which we can use to get better readings and understand the market better. Under this post, please leave comments and tell us which indicators or strategies you want to know about more. Which ones are more helpful? Which ones aren't accurate at all? Let us know the title, and we will publish an educational idea about it. Thank you.
Education
by ShawnMCR
60
Elliott Wave Cheat SheetAlthough Elliott Wave Theory is vast subject and needs in depth study, I'm sharing a cheat sheet for those who have started to learn about the same. This should help them in understanding things better. Also, try to correlate the cheat sheet with Nifty50 daily chart and be amazed to see how nicely the Elliott wave principles were followed there in the recent wave. At the same time, please use discretion while following this cheat sheet as this sheet covers only the basic aspects of Elliott Wave principles. Keep (l)earning and keep sharing!!
NSE:NIFTYEducation
by WaveTattva
3