Good evening guys,

Hereby the first article regarding one of the strongest indicators we’ve got → Fibonacci levels. I’m
using it on a constant basis, as I’m finding this indicator to be one of the best to use (next towards
the moving averages, RSI, MACD, Stoch, volume indicator and price movements with support and
resistance levels).

I’m going to discuss the Fibonacci levels in three articles and given that some members of the group
have a simple basic knowledge regarding technical analysis and trading, I’m going to write this one
with basic information regarding Fibonacci trading. The first one will be about: how to use it in
TradingView, how to use it in general with placing the bottom and top, which levels are important,
how to define targets.

Next week I’m going to write an article regarding the combination of the Fibonacci indicator with
divergences and other indicators and how to trade on it. The last article will be written about Elliott
Wave and more complex matters. Also an article about resistance and support levels is coming up
this month/first week of December, so I’m excited to go for it.

How to use the Fibonacci indicator in TradingView?

Practical information on how to use the Fibonacci indicator can be seen here, as there are a few
different ones.

The third button on the left is the one you have to use: Gann and Fibonacci tools. There are two
important ones.
The first one is the fib extension indicator, which is commonly used to define targets. Example here
from XLM:
https://www.tradingview.com/x/413Jo5Ja/
In this one we’ve used the fib extension indicator to define the upwards target, which is seen to be
the 1.618 fibonacci level (which we’re also calling the Golden Ratio and the strongest fibonacci level
around). More on that on a later moment in this article.

The second one we’re using is the fib retracement one, which we’re using here:
https://www.tradingview.com/x/0aYTGCp4/
In which it has found a support at the 0.618 fib retracement level before continuation upwards.

So, these two fibonacci indicators are the important ones to be using when you want to use them
(and also work the same the other way around obviously).

How to use it with placing the bottom and top levels when using the Fibonacci indicator?

There are two different ones to be using. When you’re using the fibonacci indicators for a
retracement, then you’re placing the 0 at the top of the wave and the 1 at the bottom of the wave to
see which levels are sufficient. An example, as found on internet:
In this example you can see that we’ve placed the 0 at the swing high and the 1 at the swing low, in
which it retraced towards the 0.382 fib level from the retracement (if you’re placing the 1 at the
swing high and the 0 at the swing low, then it would have been a bounce on the 0.618 fib level). The
bounce upwards is also on the support of the earlier swing high and continued the upwards trend
from here.

If you want to define targets from the whole upwards wave (so a breakout upwards), then you’re
placing the fibonacci with the 0 at the swing low and the 1 at the swing high, like the following
example:
In this example the 0 is placed at the swing low and the 1 at the swing high. You can see that it barely
ranged between the 1.382 and 1.618 fib level and generally broke downwards afterwards (I’m
expecting that it would have seen some serious bearish divergences before actually turning
downwards). So that’s also something about target measurement.

So, how does this work when the coin decides to drop below the earlier support level, how to define
targets then?

Well, we can do an example by ourselves through TradingView to show this one:

In this example from Stratis you can see that we’ve placed the 0 at the swing high (debatable
whether we need to use the wick or the candle in this perspective), we’ve placed the 1 at the swing
low of the support, before we’ve failed to keep it and dropped below that one. Target measurement
can be defined the same way as we’ve seen with the fib extension tool and now flipflopped.

Which levels are the ones to look for when trading?

In general the following levels are the most important ones for me:
Retracements: 0.382, 0.5 and 0.618 levels. The 0.236 will mostly only be used in ABC correction
waves in which the coin reverses back towards downwards movements (this will normally also be the
0.382 fib level of the small wave).
Full retracement: 0.786-0.886 area.

Breakout upwards target zones can be defined by (when you’re using the full wave) the 1.414-1.618
zone and when we breakout downwards the target area from the downwards breakout can also be
defined by that zone (see examples later in this article). Also the ‘2’ and ‘2.618’ fib levels are used,
however less common than in practice.
Examples and how to define targets through Fibonacci

Hereby I’m presenting five examples on how strong the fibonacci tool actually is, with the first one
being XLM (which I’ve posted just a few minutes ago on Twitter as well).

1 – XLM Example on using the Fibonacci tool.

https://www.tradingview.com/x/8kNeR0y1/ (I’m placing these ones with the link only, otherwise
we’ll see some serious lengths in the article).

What we can see here on the left is a huge breakout upwards. This whole wave upwards ended
around 4400 Sats, ending in a full retracement towards the 0.786 fib level. Bullish divergences there
indicating the reversal --> breakout upwards and run towards the 0.382 fib level of the whole wave.
After that a retracement towards the 0.618 fib level and earlier resistance before the small breakout
upwards + finding support there. After that another wave upwards towards the earlier resistance
zone, to hang a little before breaking out upwards. This next wave can be described by the fib
extension tool, which we’ve defined the target to be the 1.618 fib level, which is also the 0.382 fib
level from the whole retracement wave. From here I’m expecting that we’ll be finding support at the
0.5 or 618 fib level from the whole retracement, which can be seen here:

https://www.tradingview.com/x/WmGIAiMT/
One of the two smaller orange zones. What to look for? Well bullish divergences on the smaller
timeframes & then we’re ready to fire up some more. Hitting the 0.5 fib and reversing there would
indicate a 4th wave and bounce above the 1st wave and then generally we’ll see another 5th wave
coming up. Example here:

https://www.tradingview.com/x/DRtuD5Ph/
In general we’ll see a 5th wave towards the 1.382 fib zone to complete the bullish divergences there.
Already there are some, so we have to see whether we’ll indeed see a 5th wave coming up or not.

Overall look on the retracement as described above can be seen here:

https://www.tradingview.com/x/hCLh8Y9x/

2 – Nasdaq retracement after hitting the top for now. How to define the target retracement level and
how to use the bullish divergences example?

Well, we’ve got another one here. First of all the whole fibonacci placement:
https://www.tradingview.com/x/iaUpdVJm/

Full retracement of the whole wave upwards can be seen here towards the 0.786 fib level + what we
can see some more here is the bullish divergences which have been created on the daily timeframe
for confirmation of the support.
Smaller timeframes we can see them as well:
https://www.tradingview.com/x/NUonmJvO/

However, it’s running a little too hard for me no wand generally it’s a run towards the midterms
today or something else. How to define the targets from this rally upwards (as it’s a 5-6% rally
already).

Well, then we’re just placing the 0 at the swing high and the 1 at the swing low from this
retracement:
https://www.tradingview.com/x/wHvOeWkx/

Targets can be found throughout the 0.382 and 0.5 fib levels. Keynote here: if we’re reversing from
this level, we’re creating a lower high with hidden bearish divergences. If we’re bouncing from the
0.382 fib level, we’ve got a higher high, and then the question continues whether we can stay above
the 0.618 fib level or not. So, many questions, however I hope this helps on defining the targets.

3 – Bitcoin retracement and target levels, few examples.

We’ve seen some significant retracements and bounces on Bitcoin throughout the year, however
how can we define the targets before retracement? A few examples I’ve been using throughout the
year.

First one:
https://www.tradingview.com/x/YA3A95bu/
This whole wave bounce upwards rallied towards the 0.618 fib level of the whole wave down and
made some bearish divergences there (depending on the timeframe and exchange you’re using
though). After that we’ve fully retraced towards the support from the wick downwards to find
another floor there.

Second one:
https://www.tradingview.com/x/44Ad7nq2/
Retracement downwards here targets where defined by the 1.414 and 1.618 fib levels. Ultimately
we’ve bounced from the 1.414 fib level, however this could be defined as target measures fors ome
more retracements and ultimately made bullish divergences there before continuing.

Third one:
https://www.tradingview.com/x/SFpOnMas/
Again target can be defined by either the 0.618 or 0.382 fib level. In this particular example the fib
level was defined by the 200 EMA there + 0.382 fib level, which is quite significant and reversed with
some bearish divergences (the exact same happened with the 10K reverse earlier).

Hopefully this have been helpful!