All language subtitles for 5. How to Trade Based on Fibonacci Levels

Hello and welcome back to cryptocurrency trading masterclass by a wealthy education in this video.

I'm going to talk about how to trade based upon Fibonacci levels.

So one of the most common tools that a technical trader will use is the Fibonacci retracement tool.

And you can see that there is a submenu here.

It normally looks like this.

It's got this little pitchfork to you.

Click on the arrow.

You got a fib retracement.

So that's the symbol you're looking for.

Now, a Fibonacci retracement.

OK, go ahead and put it on and I'll I'll go through this here with you in a minute.

You can see it's on trading view, it's it's an array of colors, right, and there's levels here.

With decimal figures now, Fibonacci is a mathematical sequence that.

Fibonacci, a mathematician in 13th century Italy, had come up with.

A ratio that seems to repeat itself in nature, the curvature of rivers, not a less symmetry of the

face.

Crops, as far as crop growth, all kinds of stuff measures a repeatable pattern and Fibonacci sequence.

Is.

Basically.

Like this, so you take two numbers and you have these two two together and you get two and then you

take the second one and you add it to this one.

And you get three and then you take the second one of these two and you add it together and you get

five and then eight.

And then 13.

And so on.

Twenty one, so the significance of this is he found symmetry.

Throughout nature, and it helps with pattern recognition, so traitor's for a long time, long before

Fibonacci sequence came about.

Used to use the point.

This is 50 percent, so if a market rallied, say, ten dollars, they would pull back, you know,

the market would fall, pull back and about five dollars they would try to get involved based upon this

impulsive potential uptrend.

Right.

Trying to find a little bit of value.

So although 50 percent or point five or 50 is not a Fibonacci number, it is included in the Fibonacci

sequence for that reason only.

There's something called the golden ratio, and that is.

One point six, one eight or sometimes.

Right now, the sixty one point eight percent, one hundred and sixty one point eight percent and this

is.

A ratio that shows up time and time again in nature.

Really at the end of the day.

What you're looking for is repeatable patterns, right?

So let me go ahead and show you how this is used.

So we click on the tool and you look for a swing high in a swing low.

And if you remember from the first video I talked about, swing high and swing low, the swing low on

this chart is down to here and the swing high, depending on when you were looking at this.

But let's just say up till now is here, so each one of these levels suggests that it might be an area

where the market pulls back to.

And you may look to go long, you may look to buy it, it's a retracement you're looking at for it to

retrace to one of these ratios.

The most important one is the golden ratio, that's sixty one point eight, but 50 percent and thirty

eight point two are very important as well.

And in fact, for myself, I don't use twenty three point six, nor do I use seventy eight point six.

Some traders do.

Some traders don't.

It's entirely up to you as to how you choose to do it.

You'll notice the one point six one eight that is a potential pull back as well, where you wipe out

the trade and, you know, if you turn around and you break down and you destroy this uptrend, that

is a potential target and so on.

You know, I can go to like the weekly chart.

And you can see just how much of a move that would be so going back to let's even go to a 30 minute

chart.

This gives you.

You know, some potential support and resistance to work with, but let's say you're trying to use this

as the markets move, right?

So you're going in and then you see an uptrend.

And here's the thing.

You feel that you've missed the move, but you would like to participate.

So you look for that swing low and that swing high.

So in this case, you could draw you click that tool and then drag it up to here.

To that level there, you draw it across and what you will find, more often than not, there is a Fibonacci

retracement level that comes into play and in this case, it is that sixty one point eight.

Level.

That's.

The basics of it, what you'll do then is you will take the trade on a bounce, it continues to go higher.

You put your stop loss behind the Fibonacci level with an eye on the other Fibonacci levels most of

the time.

What people do, though, is they look to recapture the mood.

So you're capturing sixty one point eight percent of the move.

Your stop loss is underneath here and you just let it rip.

Now.

There are some pros and cons to using Fibonacci, one of the most.

One of the biggest.

Prose is that so many people use it, it's very common for people to use it.

There are people who their entire trading routine is based upon Fibonacci, so.

That is something to think about, you know, however the cons are, does it really have any type of

natural pattern or is it more or less just self-fulfilling prophecy?

And the answer to that is it really doesn't matter.

It doesn't matter if there's anything magical about the sixty one eight point six one eight ratio.

In training, as there is like in determining the way crops grow and such, what matters is a lot of

troops out there believe it.

So that being said, there's no point in fighting it right now, it works.

It's a fractal type of thing.

So it works in various time frames.

So we try to rally here.

We try to rally here.

And then we broke down again.

It rallied.

After breaking down, you missed the move and you want to try to capture that, so you look for a logical

place.

To get involved and you see that the sixty one point eight level did offer resistance.

Stop loss above there and you continue to.

Look for.

The trade and this was the same thing, I'm just dragging this wing high down to the swing low.

A lot of times.

You will see these things kind of match up with support resistance as well, and that is actually a

great thing.

So this support line here.

Let's put it thirty one seventy five for now, although it might actually be thirty two, but as I draw

this again.

Notis.

There's a sixty one and there's your former resistance line now offering resistance again.

Something to pay attention to.

Just as.

You can see that.

This resistance area caused the market to pull back to this support area, so let's go ahead and draw

these lines again.

So that in and of itself.

We capture your attention.

As a support resistance trader.

Add a Fibonacci retracement to it and then, you know, you've got a couple of different things at that

point, you're talking about something known as confluent.

Confluence is when you have a couple of different reasons to take the train.

Notice how it's right around the 50 percent Fibonacci retracement level, giving up half the traders

finally pushed to the upside.

And this works.

In pretty much.

Pretty much any market, pretty much any.

Time frame, so, like, I've got Monero here and let's go down to the five minute chart.

Again, these don't mean as much on the five minute chart.

They are a little bit more easily broken.

But let's go ahead and take a look.

That support showed up again.

That support and resistance in this area, you know, this is.

An obvious area where we came back, we tested, we found a little bit of support right here at the

thirty eight point two.

Now, the thing is, the less you pull back, the more likely you are to have an extended move.

And you can see we did extend it.

So, for example.

If a market pulls back to sixty one point eight, say this pullback to here, then that is a little

bit deeper of a correction and that means there's a little bit more thought going on to it.

However, if it only pulls back to thirty eight point two, then that typically means that there's a

lot more excitement to get in.

Traders are not waiting as long to start buying, and that should be reflected in the trade.

So.

As far as the Fibonacci levels, if you wish to adjust them.

You draw one.

On the chart, and then you right, click and go to settings.

Click on style, you can change the colors and for simplicity, I am going to remove.

What I consider to be the lesser.

Levels and I'm going to extend lines to the right.

You can always go apply defaults to get back to the way it was, you can save this as whatever you want

to save it.

So click OK, and you can see it's changed completely.

I've got sixty one point eight fifty percent, thirty eight point two.

So again.

You know.

Wee wee wee rally from here to here, we pull back to the thirty eight point two percent Fibonacci retracement

level and we take off, so that's a thirty eight point two percent pullback.

I know that typically means you're going to run, so you might want to give it a little bit more time.

So in the next video, we'll show you some examples of how to actually use this bit of information,

but this was a video I wanted to, you know, familiarize you with Fibonacci retracement levels and

you know how to.

Kind of go along with because you will almost certainly, even if you don't use them, you will certainly

run into a lot of that and analysis, you know, through your trading career.

You need to be aware of the fact that when they line up with support, you know, for example, you

know, if you see support here, well, you know, you might say, OK, well, is that a fib level as

well?

Well, yeah, it is.

Basically, it's thirty eight point two.

You know, that gives me another reason to think that maybe this is worthwhile to trade.

So in the next video will go through a few examples.