Fibonacci

Version 1.0: 2021-02-31

General:

• Everything I have learned of fibs, big credit to my mentor Brady_Atlas. In addition, screen time and charting and practice.

• I use Fibonacci retracements and extensions in my trading strategy, in conjunction with volume profile.

• Fibonacci's are mathematical ratios that are present in everywhere in life, including the stock market.

• Fibonacci's give an idea of where the price or time should go to and are present on every time frame.

• They should be drawn from impulse high to impulse low, on any timeframe.

How I Use Them:

• I utilize Fibonacci retracements and extensions on every time frame, in every trading strategy. As noted, they give me an idea of where the price should be going. Fibonacci time ratios is something I am still working on.

• Depending on the timing of the trade I want to be in, will depend on where I draw my Fibonacci impulses.

  • Day trade - 1d / 3 min, 5 d / 15min

  • Short term swing – 14d / 1h, 30d / 4h

  • Long term swing – 3m / 1d, 6m / 1d, 1y / 1d

• I look for similar impulse patterns on larger timeframes, to get an idea of similar patterns and how fib levels could be reached. This is especially important when drawing out fib extensions, to understand the upside. History has a tendency of repeating itself.

• Retracements give me an idea of where price action should retrace/pullback to for a bounce. I personally like the 50% and 61.8% retracement. Everything is dependent on price action and volume profile, but I will almost always scale at these levels, on the appropriate time frame.

• Extensions give me an idea of where price action should go to, after it goes above the impulse. Typically, with high momentum tickers, price action is attracted to the 161.8%, 261.8% etc extensions and the 100%, 200% etc extensions. Something with lots of momentum, those levels will typically be where my PTs lie, after breaking 100% (pivot high)

• Profit Taking: I use fib levels to determine scaling out point in addition to scaling in, where they are supported by high volume nodes and whole numbers.

Confluence:

• Just as Brady has taught, I find combining Fibonacci's with volume profile is incredibly powerful. I find myself often only using these two alone when trading. When drawing my Fibonacci's, it usually requires a bit of guess and check, until I find levels that I like. These levels typically have some key characteristics:

• Fibonacci levels typically line up with at least one of the 50%, 61.8% or VPoC.

• Fibonacci levels have multiple touches at price levels, defining support/resistance areas.

Takeaways:

• Fibonacci’s are incredibly powerful for levels to scale in and out.

• Drawing them is an art. There is a level of subjectivity to them, however, when combined with volume nodes and pattern analysis, can create a significant edge for any type of trading.