How to Use Fibonacci Levels for Profitable Crypto Trading

A Fibonacci retracement forecast is created by taking two extreme points on a chart and dividing the vertical distance by Fibonacci ratios. 0% is considered to be the start of the retracement, while 100% is a complete reversal to the original price before the move. Horizontal lines are drawn in the chart for these price levels to provide support and resistance levels. Common levels are 23.6%, 38.2%, 50%, and 61.8%. The significance of such levels, however, could not be confirmed by examining the data. Arthur Merrill in Filtered Waves determined there is no reliably standard retracement

1. What are Fibonacci levels?

It’s flat lines marking potential support and resistance points where prices might reverse

The key to successfully using Fibonacci is to apply it in a trending market

A long position at a Fibonacci support level during an upward trend and the opposite for a short position

2. Why do we use Fibonacci levels?

There are two main reasons why we use Fibonacci levels:

1. Strength of a move in the market
2. High probability support and resistance Now, let’s explain each one separately

3.The strength of a move in the Market

Using Fibonacci, we can also determine the strength of market movement. The ratio of levels to strength:

• 0.236-0.382 – Very strong
• 0.5-0.618 – Normal
• 0.786 – Weak

4. High probability support and resistance

1. Strong trend – 0.236/0.385 = hold
2. Weaker trend – 0.618/0.786 = hold And when a Fibonacci level aligns with your support/resistance levels, it is the biggest change to hold

5. How to use Fibonacci levels?

• Find Fibonacci levels in the left panel of tools on TradingView
• For an uptrend, you need to click on the Swing Low point and drag it to Swing High
• For downtrend, click on the Swing High and drag it to Swing Low

6. Now, we can move on to practice.

I will cover the three main situations where employing Fibonacci levels can assist in identifying optimal entry points:
1. Uptrend
2. Downtrend
3. Golden Pocket Let’s dive in

7. Uptrend retracement

Uptrend, the Fibo levels are placed from the Swing-Low to the Swing-High

– If the price bounces off the 0.382 level, it’s uptrend
– If this level is breached it’s most likely the golden pocket
– And if the 0.786 becomes the last line it’s a weak support zone

8. Downtrend retracement

During the downtrend, the Fibo levels are placed from the SwingH to the SwingL – A strong downtrend must be followed by rejection at the 0.236 level – To trade long, wait for Support/Resistance reversal at the 0.236 level

9. The Golden pocket retracement

✧ The Golden retracement is the range between the 0.618 and 0.66 Fibonacci levels – It serves as a favorable area to strategically enter positions

And finally, I want to add: No indicator is a panacea, and I am generally skeptical of t/a. I use them simply as auxiliary tools to find the best entry and tp. Look at the bigger picture, evaluate fundamentals: vesting, community, narrative, and only then use indicators and support levels to find best entries and exits. If it were that easy, then many traders would become millionaires just by applying Fibonacci levels or any other indicator…

Credit to @plutos_eth

Check out other trading post like Crypto Trading Made Easy: A Beginner’s Guide to Essential Indicators