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Fibonacci

Fibonacci Retracement/Extensions- How & Why? | Live ExampleFibonacci retracements in technical analysis of various assets use a mathematical sequence discovered by Italian mathematician Leonardo Fibonacci. This sequence is a series of numbers where each number is the sum of the two preceding ones: 0, 1, 1, 2, 3, 5, 8, 13, 21, and so on. In stock trading, Fibonacci retracements are used to identify potential levels of support or resistance during price corrections. Imagine you have a stock that has been rising in price for some time. Suddenly, it starts to decline. Traders who use Fibonacci retracements believe that during this downward movement, the stock price will likely retrace or bounce back to certain levels before continuing its downward trend. These retracement levels are derived from the Fibonacci sequence. The most commonly used levels are 38.2%, 50%, and 61.8%. For example, if a stock's price drops from 100 to 80, traders would expect it to bounce back to around 88.20 (38.2% retracement), 90 (50% retracement), or 93.20 (61.8% retracement) before continuing its decline. While their effectiveness is debated just like any other tool, many traders including myself believe that these levels act as psychological support or resistance points due to the large number of market participants who follow this approach. Let us get back on the example above. I drew a trendline which had helped me back in 2021 to predict the top in GOLD. This is the perfect example of how EVERY PRICE movement matters. The Fibonacci levels are derived from levels from 2008. In this example the Fibonacci extension level 3.618 held as a perfect resistance for the price of GOLD. 2008 to 2023, isn't this amazing? How long can a single price movement can have its affect! How to draw a Fibonacci Retracement/Extension? It's fairly simple. Just plot one end of the fib to the high of the price movement and the other to the low or vice versa. I'll answering all your queries in the comments below. Please feel free to reach out!
TVC:GOLDEducation
by YieldYogi
2
SP500 Entanglement of Price Action IIThe price touched the line with specific angle that covers ATH and (current) Lower High. I consider it as a point of reference because current observable price can be explained with that vector. The line separates 2 outcomes: Continuation of the uptrend Rejection Significant reversals that caused the structure to look the way it looks are: "ATH" 4 JAN'22 13 OCT'22 Lowest (> 2 years) 27 JUL'23 Lower High Those dates initiated longer term movements, hence defining the entanglement. The angle of general direction can be defined by the Fibonacci Channels of macro-fractal which emerged from Covid Low: It kinda exposes their domestic "spin to the side". Another example: Since the angle of -27.47% drop (ATH and Lowest >2yrs) are more perpendicular to the direction of time scale, the derived fibonacci would define periods of waves. Matches angle of -10.93% drop from 27 JUL'23 to 0.382 fib of the domestic structure. But, since after such drop, it didn't fall further but in reverse grew back, it must be defined with upward direction vector, the fibs of which would cover that low with cold colors. The fact of growing at higher levels after just 10% drop, deserve to get filtered with upward fibs. In respect to 31% growth the current price resides at 0.618. Further interconnectedness of points: 1.236 fib confirms that price is indeed at crossroad and in case of violating it, the price would set its tendency to move to next (1.382) fib line and reverse there under heavier pressure. Currently price is still under pressure because the market has grown to levels of domestic resistance. The curve shows mathematical function that mimics highs before reversing. Hence, it can be used to refer deviation where the price can end up after escaping ATH-LH-Current_Price vector. Otherwise, with failing to breakout now, it might go for correction in short-term perspective as soon as players notice that market is at already saturated levels.
AMEX:SPYEducation
by fract
Example of The Retracement TheoryOn the chart I include the formula and a example of how to get shirt term price targets using the retrace theory. Basic retracement theory (B-A)+C (130.77-128.71)+129.94=$132 the low = A the retrace high = B current retracement low = C Trend Strength Maximum Retracements Upside Targets (downside targets are inverse) Very Strong -14.6% to 23.7% A to B added to C Easily exceed B -Strong 38.2% A to B added to C Easily exceed B -Medium Strong 38.2% to 50% 80% of A to B added to C Should Easily exceed B -Medium 50% 80% of A to B added to C Should Easily exceed B -Medium Weak 61.8% to 50% 80% of A to B added to C Possibly exceed B -Weak 61.8% 80% of A to B added to C Possibly exceed B -Very Weak 85.4%to 76.3% 80% of A to B added to C Probably will not exceed B
NYSE:TGTEducation
by RLB512
TRADER9224, DXY, and Fibonacci :DVOLUME WARNING! My computer's mic is insane and I don't have any recording equipment so I apologize for the lack of video quality. Hopefully, my insights make up for that. Here is a quick video previewing my trading system and what I will be looking for in the next week of trading. 💡 Why Follow? Gain insights into my Fibonacci approach. Track the progress of the 100k funded account. Participate in discussions to enhance our trading knowledge.
Education
by SAT_STACKR
SP500 Entanglement of Price ActionFibonacci interconnectedness of impulsive and corrective waves. Impulsive. Since Time is taken into account in terms of angles, the Fibonacci channels derived from multi fractals simulate phenomenon of the order in chaotic price action. More like projection of Levels of Probability like in QM, where Interference Pattern derived from waves of probability in Double Slit Experiment. Nevertheless, I would never accept that price unfolds because of the very act of measurement that assumably collapses the wave function and makes it behave accordingly. I'm implying that price formation just like fabric of reality itself is not deterministic but probabilistic. In charts, the fabric of PriceTime is continuously curved by the price action itself. That's why even after dramatic rise of volatility the price would end up at certain random levels but distinctive to domestic chaos and frequency of reversals.
AMEX:SPYEducation
by fract
1
What is ICT Power of 3?Power of 3 at work on Gold producing a 8.6RR move on 30/06/2023 FOREXCOM:XAUUSD Ict power of 3 is a strategy that reveal the market maker algorithm model for price delivery. Power of 3 simply means there are 3 things market makers algorithm do with price in ever trading days. Those 3 things are; Accumulation, Manipulation and Distribution. AMD: A: Accumulation M: Manipulation D: Distribution 1. Accumulation: They accumulate liquidity through the delivery of a ranging market. The purpose for delivering a ranging market is to induce both buyers and sellers to enter the market thinking that price will go in their direction. 2. Manipulation: After accumulating both buying and sell orders, they then manipulate the market to further induce another set of traders which are breakout traders. But, that particular manipulation move is not their intended direction for the day. They only use it to gather liquidity, Which will then lead them to the next action which is to move and distribute price in their real direction for the day. 3. Distribution: After manipulating price to a particular direction different from their plan, they then distribute price to their original intended direction. e.g to buy, they will first sell the market and then buy at the discount price level. Example of Power of 3 on Gold AMD: A: Accumulation M: Manipulation D: Distribution Accumulation : Price range during Asian session, accumulating liquidity on both sides of long and shorts. Manipulation : Price broke the low of the accumulation during London session to take out sell side liquidity and then fill the previous day imbalance. Distribution : Price move away from the FVG leading to a shift in market structure on 5m time frame, plus a short pull back, follow by a massive move to the upside during the New York session to take out buy side liquidity above.
FOREXCOM:XAUUSDEducation
by Elijahenoch7
2
Advanced Bull Flag ConceptsHave you ever wondered why price action sometimes forms a bull flag pattern? Have you ever wondered if there is a way to predict whether a bull flag will break out before it actually does so? In this post, I will try to address these questions by presenting a couple of theories about the nature of bull flags. Bull Flag Theories (1) The flag structure of a bull flag tends to form along Fibonacci levels, with the ideal flag proportion being an approximated golden ratio to the flagpole; and (2) Fibonacci and regression analyses can provide useful insight into whether price will successfully break out of its bull flag pattern, sometimes long before price even attempts to do so. I will try my best to clearly explain both theories in detail below. Note: Although this analysis is also generally true for bull pennants, bear flags, and bear pennants, to keep things simple I will focus solely on bull flags. Additionally, this analysis is generally true across timeframes. Part I - The Basics of a Bull Flag First, let's begin with the basics. As shown in the image below, bull flags form when an asset is in a strong uptrend. The uptrend forms the flagpole of the bull flag structure. The flag structure forms when price consolidates, usually in a falling trend. This consolidation phase is often characterized by price oscillators rotating back down while the price retraces only a small part of its prior upward move. From a market psychology perspective, bull flags often form when most market participants who bought the asset continue to hold it expecting the uptrend to resume, while only a minority of market participants sell (or short the asset) as its price corrects downward. The bull flag pattern is a continuation pattern because it reflects the market's general expectation that price will eventually resume its upward move. Once the price definitively breaks above the upper channel of the flag (often with strong momentum and high volume), the bull flag pattern is validated. Upon breakout, the expected move up is equal to the vertical height of the flagpole. Part II - The flag structure of a bull flag tends to form along Fibonacci levels, with the ideal flag proportion being an approximated golden ratio to the flagpole Here's where things begin to get interesting. Below is the golden ratio. Two quantities, a and b (where a > b ), form the golden ratio if their ratio is the same as the ratio of their sum to the larger of the two quantities. (See the equation below) The equation above shows the Greek letter phi which denotes the golden ratio. Phi is equivalent to a/b when such ratio is also equivalent to (a + b)/a. Although bull flags can take various forms, it is my hypothesis, based on chart analysis and research, that the most perfectly structured bull flags (ones that also have the highest probability of successful breakouts) occur when the flag forms a golden ratio to the flagpole. Mathematically, this means that the vertical height of the flagpole is equivalent to (a + b) and the vertical height (i.e. the width) of the flag is equivalent to b. This is also to say that price retraces down to the 0.382 Fibonacci level as measured by applying Fibonacci retracement levels along the flagpole (or to the 0.618 point on the vertical height of the flagpole if one measures from the bottom to top). I realize that this can be quite confusing, so let’s walk through some visualizations. Let's first visualize this hypothesis using the golden rectangle. Below is an image of the golden rectangle. A golden rectangle is composed of a square (with sides equal to a) and a smaller golden rectangle (with width equal to b and length equal to a). Now let's rotate the golden rectangle to better visualize the hypothesized flag pattern. The bull flag is hypothetically an approximation of the golden rectangle, whereby the width of the flag is in a golden ratio approximation to the length of the flagpole. In the illustration below, there are multiple bull flags contained within a Fibonacci spiral. The spiral is made up of golden rectangles, with each larger golden rectangle containing a smaller golden rectangle inside it. The smaller golden rectangle is the flag structure, and the length of the larger golden rectangle is the flagpole. One can think of the Fibonacci spiral and the golden rectangles as a series of bull flags that build on top of each other in a repeating pattern. In this diagram, price is represented by the increasing length of the sides of each golden rectangle. In other words, the price on a chart can be seen as spiraling higher after each bull flag breakout. Of course, not all bull flags form a structure that approximates the golden ratio, but it is my belief that in forming a bull flag, price action is aspiring to achieve as close of a golden ratio approximation as it can. I believe that the bull flags that best approximate the golden ratio structure also present the highest probability for a successful break out. To learn more about Fibonacci spirals, including the golden spiral that Fibonacci spirals approximate, you can check out this Wikipedia article: en.wikipedia.org Part III - Fibonacci and regression analyses can provide useful insight into whether price will successfully break out of its bull flag pattern, sometimes long before price even attempts to do so. To see how Fibonacci levels and regression analysis can give insight into whether a bull flag will break out or break down before it does so, let's consider an example. Let’s consider the massive bull flag that the iShares Russell 2000 ETF (IWM) formed in 2021. In 2021, the monthly chart of IWM formed what appeared to be a bull flag, as shown below. Now let's see why Fibonacci analysis and regression analysis were warning that this bull flag was not likely to break out successfully. First, IWM's price did not retrace to a Fibonacci level before attempting a breakout (when using the pole as the Fibonacci retracement reference point). In the chart below, we see that price tried to break out, without even so much as retracing down to the highest Fibonacci retracement level: $196.71. By not undergoing Fibonacci retracement, price did not give its oscillators the opportunity to rotate back down fully. Instead, price remained overextended at the time it attempted to break out. Now let's look at regression analysis. Below is a log-linear regression channel that contains IWM's entire price history. As noted in my prior posts, a regression channel simply indicates how far above or below the mean (or average) price an asset's current price is trading. In the regression channel above, the red line is the mean price, the upper channel line is 2 standard deviations above the mean, and the lower channel line is 2 standard deviations below the mean. A successful breakout of the bull flag would have taken IWM's price way above its regression channel, to a level that is too many standard deviations above its mean price for us not to question the probability of the breakout’s success. Achieving the full measured move up would have been extremely unlikely, assuming that the regression channel is valid and that price tends to revert back to its mean over time. What was more likely than a breakout was a breakdown, and a reversion back to the mean, which is what ended up happening with IWM. Another interesting note about IWM’s bull flag is that it presented a false breakout in November 2021. This false breakout was presenting multiple warnings signs including being a UTAD test of a Wyckoff Distribution. As shown below, however, another important clue that the November 2021 breakout would likely fail was that the breakout was not confirmed when comparing IWM to the money supply (M2SL). See the chart below. One can interpret this chart to mean that in late 2021, IWM’s price was rising because the central bank was increasing the money supply, but not due to improving strength of the underlying companies that comprise the ETF. Using the money supply as a ratio to an asset elucidates the true inherent strength of the asset's value. To understand more about why the money supply can be used in this manner, you can check out my post below. Part IV - Additional Comments I have a few additional comments. I usually use Fibonacci levels on a log-scale chart to identify Fibonacci spirals because Fibonacci spirals are logarithmic spirals. However, when using Fibonacci levels based on log scale, the ratios, percentages and numbers, can seem quite confusing because they are logarithmically adjusted. If you choose to replicate my process, please be mindful of this. While using log-scale charts is critical for higher timeframes (e.g. the monthly chart or higher), I have not identified much benefit to using it on shorter timeframes. In a prior post, I noted that Plug Power (PLUG) is currently forming one of the best-looking log-scale, golden ratio bull flags I have ever seen. If my above hypotheses are true, I would expect to see PLUG move dramatically higher in the years to come. For more information about PLUG, you can read my post linked below. (This is not a solicitation to buy PLUG. Please do your own research and carefully consider all risks.) At the risk of making this post too long and too dense, I just want to briefly note that it is also my hypothesis, based on observation and research, that the golden ratio is where many S-curve dilemmas are solved. If you don't know what an S-curve dilemma is and you'd like to read about this you can see my post below about Jumping S-Curves . In short, an S-curve dilemma is another way of conceptualizing the question of whether a bull flag will break out or break down. I hope that someone finds value in this post. I spent a lot of time studying, researching, analyzing, and cogitating the mathematical nature of price action to reach many of the conclusions here. Thank you for your valuable time in reading my post.
AMEX:IWMEducation
by SpyMasterTrades
51
How to Profit from Trend Exhaustion - XAGUSDHow much ... and when? What else is there to know? Enjoy this multi-timeframe tour of the XAGUSD chart to learn how I find MAJOR reversals and targets BEFORE price action reaches them. As always, I strive to produce charts that speak for themselves, and yet this is my video debut here on Tradingview, and I could not be more pleased to narrate this unusual experience. If you enjoy it or, better yet, if you learn from it, then consider this a preview of forthcoming weekday morning livestreams, which I hope you will follow. Until then, be liquid!
OANDA:XAGUSDEducation
by TheLeadingIndicator
4
What is Support & Resistance (S&R)? What Types of S&R?Support & Resistance (S&R) is one of the basic topics that we need to know in trading, whether trading forex, shares or cryptocurrency. Support & Resistance can show the upper and lower limits of price movement in a certain time. *) Resistance is the upper limit to limit prices from rising further. *) Support is the lower limit to limit prices from falling further. The market moves because of differences in demand and supply. When demand is greater the price will rise, if the supply is greater the price will move down. Types of Support & Resistance: 1. Classic S&R The way to determine S&R in Classic S&R is using previous swing high and swing low as referece (picture no.1) The advantage of using this method is we can know previous S&R and we can use that as our reference to determine target profit, or stop loss area. The weakness of using classic S&R is when the price break S&R we don’t know the next S/R 2. Dynamic S&R The way to determine Dynamic S&R is using moving average. We determine high point & low point when price touch moving average diagonal line. (picture no.2) 4. Harmonic S&R Harmonic S&R Is useful to determine S&R when price in all time high. The weakness of Classic S&R is when the price break S&R we don’t know the next S&R, because of that we use Harmonic S&R to analyze the next target profit or loss area. We use Fibonacci methode (picture no.3) to determine S&R How we know this is a strong S/R or not? That is a strong S/R when the price touch the S/R area and the price have a strong movement. Function of Support & Resistance Support & Resistance makes us know if this area can be a price target area, so we understand if the price doesn’t always go up or down, so we must to take profit and we have to put a stop loss. In stock market activity, support & resistance prices indicate certain psychological levels, like: *) Support is the level where people buy shares at the lowest price and make a profit when the price rises. *) Resistance is the level where people have bought shares at the highest price and experienced losses because the price fell. That activity becomes a repeating pattern. People tend to buy at the support price because they know the price will rise and when the price is almost or already in the resistance area they will sell. In the Forex market, we can have 2 positions in the same time, So when the price is at the support we can make a purchase, and when the price is at resistance we can sell the previous position and in the resistance area we can also look for a selling position with a profit target in the previous support area and a stop loss area above the resistance area, because if price breaks through the resistance, price will continue to rise and create a new resistance. Notes: 1. The source of this writing comes from several ideas that I have read, heard, or experienced personally. So if those of you reading this post & feel this is your idea, Please allow me to share again, because maybe I also learn from you. 2. The topic of Fibonacci and Moving Average will be discussed at another time Thank You. 28 Sep 2023
BINANCE:BTCUSDEducation
by moca_nomic
Exploring the 4 Key Types of Fibonacci Tools🌐📈💫 In the vast cosmos of forex trading, Fibonacci tools serve as celestial guides for traders seeking precision and insight. These mathematical wonders unlock hidden patterns, potential reversals, and projection zones in price charts. In this comprehensive exploration, we'll embark on a cosmic journey to discover the four essential types of Fibonacci tools that can illuminate your path to forex trading success. Through real-world examples, you'll gain a profound understanding of how these tools can be your North Star in the forex galaxy. The Four Types of Fibonacci Tools Fibonacci tools are a diverse constellation, each with a unique purpose. Here are the four primary types that shine brightest in the world of forex: 1. Fibonacci Retracement: The Price Bouncer *Fibonacci retracement* is a key tool for identifying potential reversal levels during corrective price movements within an established trend. Traders often use the key retracement levels of 23.6%, 38.2%, 50%, 61.8%, and 78.6% to pinpoint areas where price may bounce. 2. Fibonacci Extensions: Mapping Future Horizons *Fibonacci extensions* project potential price targets beyond the current trend. Key extension levels include 127.2%, 161.8%, 261.8%, and 423.6%. Traders use these levels to anticipate where price might head after a trend has formed. 3. Fibonacci Fans: Drawing Trendlines *Fibonacci fans* are tools for identifying potential trendlines by connecting significant high and low points on a price chart. These diagonal lines assist traders in spotting areas of support and resistance. 4. Fibonacci Arcs: Curving Towards Clarity *Fibonacci arcs* offer a different perspective, using curved lines to identify potential support and resistance levels. These arcs are drawn from significant turning points on the price chart. The world of Fibonacci in forex is a constellation of tools that can guide traders through the cosmic expanse of price charts. By mastering the four key types of Fibonacci tools and incorporating them into your trading strategy, you can enhance your ability to identify potential reversals, projection zones, and trendlines. Whether you're a seasoned trader or just launching your trading voyage, these Fibonacci tools can be your guiding stars in the forex universe. 🌐📈💫 Do you like this post? Do you want more articles like that?
Education
by ProSignalsFx
2
Bitcoin's Recent Battle with Fibbonaci🛡️Hey there, crypto enthusiasts! Let's take a closer look at the recent Bitcoin pump that didn't quite take off as expected. It turns out, we encountered a significant resistance level at the 0.5 Fibonacci retracement on the Fibonacci retracement tool. 📊💡 🌐 The Fibonacci Fascination: Before we delve into the recent action, let's touch on the golden tool of technical analysis – the Fibonacci retracement. It's a tool that helps traders identify potential support and resistance levels on a chart based on the Fibonacci sequence. 💰 The Golden Ratio: In this case, we're talking about the golden Fibonacci retracement, the 0.5 level. This level is often seen as a crucial point on the chart. When an asset like Bitcoin retraces to this level, it can act as either strong support or resistance. 📈 The Recent Pump: Bitcoin recently experienced a significant price pump, and many were hopeful that it might lead to a substantial rally. However, the price action encountered resistance right around the 0.5 Fibonacci retracement level. 🛡️ The Battle at 0.5: This level represents a critical point where traders and algorithms make decisions. It can be a make-or-break point for a potential bullish run. 📊 Fibonacci in Action: To use Fibonacci retracement, simply select the tool on your trading platform, and then click on a significant swing low and drag to a swing high. The tool will automatically plot the retracement levels, including the golden 0.5 Fibonacci retracement level. 📚 Fibonacci Tips: When using Fibonacci retracement, keep these tips in mind: Look for confluence with other technical indicators. Consider it a tool in your trading toolbox, not a standalone strategy. Combine it with your overall trading plan and risk management. Remember, while Fibonacci retracement is a powerful tool, it's not foolproof, and market dynamics can change rapidly. Stay informed, stay adaptable, and keep honing your trading skills. 🔄📈
Education
by AlexWhale
ES Morning Shorts From Last Nights IdeaGood Afternoon everyone, I will show in depth order entries in this post, read the updates to see. This idea was formed last night around 10PM NY Time. I originally was hoping to trade up into the most recent Order Block (green path arrow) during the London session and end at the Terminus -4 around 8:00AM NY time. I then would've liked to see accumulations followed by a Turtle Soup or sweep of that low at the Terminus -4 during market open. I wanted to take countertrend longs in that area into the Order Block resting above the Liquidity Void, this move is denoted by the orange path arrow. However we ended up going straight to Terminus -4 during London and we rallied above Asia accumulation into the Bearish Order Block sitting right above (green path arrow). We took shorts from this area and we were looking to target the Sellside Liquidity below to complete our MMSM (Market Maker Sell Model) on the 15M chart. We were able able to bank 2.1% off the move just by taking profits at the short term low 4507.5 and holding a few more contracts to a slightly lower price once we noticed price wasn't wanting to break the low at the Terminus -4 just yet. The Sellside Liquidity is still a viable target, we have just been choppy since right after open so taking profits is worth the time spent waiting for price. Hopefully this was more insightful on how to form an idea for the next trading day. I will commit to making more informational posts like this. Please read the updates for a 5M look at the entries and a reference to the MMSM.
CME_MINI:ES1!Education
by blackoakcapital
UNVEILING THE COMPREHENSIVE ARSENAL OF TRADING TOOLS The trading landscape in the 21st century is characterized by a revolutionary fusion of cutting-edge technology and financial acumen. As the accessibility of trading increases, traders wield a versatile suite of tools that encompass chart patterns, Fibonacci retracements, Andrews' pitchfork, and the Zig Zag indicator. This in-depth exploration delves into the profound significance of these tools, unraveling their collective potential to empower proactive traders with precision, insight, and strategic advantage. The Evolution of Modern Trading Tools: The digital age has ushered in a new era of trading prowess, where rapid data flows and advanced software solutions redefine the boundaries of trading. Enabled by the synergy of computers, high-speed internet, and sophisticated charting software, traders enjoy real-time access to data analytics and market trends. Within this realm, a rich repository of tools is available, catering to traders' diverse needs with heightened precision and predictive power. Chart Patterns : Deciphering Market Sentiment: Chart patterns occupy a pivotal role as visual conduits of market psychology and price action trends. From classic formations like double bottoms to iconic patterns like head and shoulders, these visual representations encapsulate historical price movements and inform future price dynamics. Proactive traders leverage chart patterns to anticipate pivotal reversals and breakout points, weaving together historical trends and human behavioral insights into actionable trading strategies. Fibonacci Retracements: Unveiling Harmonious Ratios: At the nexus of mathematics and trading, Fibonacci retracements harmonize the natural ratios discovered by Leonardo of Pisa, known as Fibonacci. These ratios, including the Golden Ratio (0.618) and its derivatives, echo natural proportions that echo throughout nature and financial markets. Traders utilize these retracements to identify potential support and resistance levels, choreographing entry and exit points with a mathematical precision that complements market intuition. Andrews' Pitchfork: Sculpting Market Trends: From the annals of technical analysis emerges Andrews' pitchfork—a tool that imparts structure to market trends. Crafted by Dr. Alan Andrews, this method employs three pivotal price points to map out potential trend channels, identify support and resistance zones, and navigate the ebb and flow of market movements. Proactive traders harness this tool's prowess to create strategies that thrive within these discernible channels. Zig Zag Indicator : Distilling Price Trends: Navigating the labyrinthine price chart is simplified by the Zig Zag indicator—a tool designed to eliminate market noise and elucidate significant price movements. This indicator employs precise highs and lows to create lines that showcase trends with clarity, ensuring that traders are privy to substantial trends while disregarding minor fluctuations. In this manner, the Zig Zag indicator becomes a beacon amidst market complexity. A Synergistic Trading Arsenal: The amalgamation of chart patterns, Fibonacci retracements, Andrews' pitchfork, and the Zig Zag indicator engenders a holistic trading approach of unparalleled potency. While chart patterns unveil market psychology, Fibonacci retracements contribute mathematical precision, Andrews' pitchfork orchestrates trend analysis, and the Zig Zag indicator distills trends from noise, thus harmonizing a comprehensive trading strategy. Conclusion: In an era marked by unceasing innovation, success in trading is predicated upon the adept utilization of a multifaceted toolset. The amalgamated prowess of chart patterns, Fibonacci retracements, Andrews' pitchfork, and the Zig Zag indicator constitutes a comprehensive arsenal that empowers traders with foresight, precision, and strategic edge. As the 21st-century trading milieu continues its evolution, mastery over these tools remains pivotal, transforming the intricate dynamics of financial markets into a realm of opportunity and achievement. TCPLTP
BINANCE:BTCUSDEducation
by TradeChartPatternsLikeThePros
Mastering Chart Patterns: Unlocking Pro-Level Trading Insights In the dynamic world of financial markets, successful trading demands more than just a basic understanding of price movements. Chart patterns are the secret weapon wielded by seasoned traders to decipher market psychology and forecast future price directions. From the simplicity of triangles to the complexity of head and shoulders formations, these patterns offer invaluable insights into market trends. In this exclusive article, we'll delve into the fascinating realm of chart patterns, revealing the strategies used by pros to make informed trading decisions. Whether you're a novice investor or a seasoned trader looking to elevate your skills, this guide is your ticket to deciphering the language of charts like the pros. **Section 1: Decoding Chart Patterns** Chart patterns are like a language that allows traders to decipher the hidden messages embedded in price movements. By analyzing the historical behavior of asset prices, traders can identify recurring shapes and formations that indicate potential future price actions. These patterns serve as a roadmap, guiding traders to anticipate market sentiment shifts and make informed decisions. In this section, we'll delve deeper into the fundamental concepts of chart patterns, understanding their significance and the insights they offer to traders. **1.1 The Language of Patterns** At its core, chart analysis is about recognizing patterns that repeat over time. These patterns emerge due to the psychological factors driving market participants. Human emotions such as fear, greed, and uncertainty influence buying and selling decisions, giving rise to recognizable formations on price charts. **1.2 Continuation Patterns** Continuation patterns are indicative of a temporary pause in the prevailing trend before it resumes. These patterns suggest that market participants are catching their breath, consolidating their positions, or reevaluating their strategies before the trend's next leg. They are like pit stops during a race, allowing traders to prepare for the upcoming stretch. **1.2.1 Examples of Continuation Patterns** * **Triangles**: Triangles are formed by connecting the highs and lows of price movements with converging trendlines. Symmetrical triangles show a balanced tug-of-war between buyers and sellers, while ascending triangles suggest increasing buying pressure, and descending triangles imply mounting selling pressure. A breakout from a triangle can signal a continuation of the existing trend. * **Flags and Pennants**: These patterns are characterized by a short-term consolidation after a strong price movement. Flags are rectangular, while pennants are small symmetrical triangles. Both indicate a brief pause before the trend resumes, providing traders with opportunities to capitalize on quick price movements. **1.3 Reversal Patterns** Reversal patterns mark a potential shift in the prevailing trend. These formations suggest that the ongoing trend might be losing steam, paving the way for a trend reversal. Reversal patterns are like warning signs that alert traders to potential changes in market sentiment. **1.3.1 Examples of Reversal Patterns** * **Head and Shoulders**: This iconic pattern consists of three peaks – a higher peak flanked by two lower peaks – resembling a head between two shoulders. It indicates a transition from a bullish trend to a bearish one, or vice versa. The neckline, a support or resistance level, confirms the pattern's completion upon its breach. * **Double Tops and Double Bottoms**: Double tops occur when an asset reaches a peak price level twice, signaling a potential reversal from an uptrend to a downtrend. Conversely, double bottoms form when prices hit the same trough twice, indicating a potential reversal from a downtrend to an uptrend. By understanding these basic concepts of chart patterns, traders gain a foundational grasp of how to interpret the language of price charts. Continuation patterns offer insights into temporary pauses within a trend, while reversal patterns hint at potential trend shifts. In the subsequent sections, we'll dive deeper into specific chart patterns, exploring their intricacies and uncovering the strategies employed by professionals to maximize their trading edge. **Section 2: Common Chart Patterns** In this section, we'll dive into some of the most prevalent chart patterns that traders frequently encounter. Each of these patterns provides valuable insights into market dynamics, helping traders make well-informed decisions. By understanding the intricacies of these patterns, traders can gain an edge in predicting potential price movements. **2.1 Head and Shoulders Pattern** The Head and Shoulders pattern is a classic reversal formation that stands out due to its distinctive shape resembling, as the name suggests, a head and two shoulders. This pattern occurs after an uptrend and is composed of three main peaks: 1. **Left Shoulder**: The initial peak in an uptrend, signaling a potential weakening of bullish momentum. 2. **Head**: The central and highest peak, often accompanied by high trading volume. It indicates the last attempt of bulls to push prices higher. 3. **Right Shoulder**: The third peak, usually lower than the head, signifies another failure of bulls to sustain the uptrend. The neckline, a support level connecting the low points between the left and right shoulders, is a critical element of the pattern. A breach of the neckline confirms the pattern's completion and suggests a potential reversal from a bullish trend to a bearish one, or vice versa. **2.2 Double Tops and Double Bottoms** Double tops and double bottoms are twin formations that provide insights into potential trend reversals: * **Double Tops**: This pattern occurs after an uptrend and forms when an asset reaches a peak price level twice. It signals that buyers are struggling to push prices higher, and a reversal to a downtrend might be imminent. * **Double Bottoms**: The counterpart to the double top, this pattern forms after a downtrend. It emerges when prices hit the same trough twice, suggesting that sellers are losing momentum, and a reversal to an uptrend could be on the horizon. These patterns are a reflection of the tug-of-war between buyers and sellers and can help traders identify critical support and resistance levels. **2.3 Triangles** Triangles are consolidation patterns that indicate a temporary balance between buyers and sellers. There are three main types of triangles: * **Symmetrical Triangles**: Formed by connecting lower highs and higher lows with converging trendlines, symmetrical triangles suggest uncertainty in the market. Traders watch for a breakout, which can lead to a continuation of the existing trend. * **Ascending Triangles**: Comprising a horizontal resistance level and an upward-sloping support line, ascending triangles indicate increasing buying pressure. A breakout above the resistance level could signal a bullish move. * **Descending Triangles**: The opposite of ascending triangles, descending triangles have a downward-sloping resistance line and a horizontal support level. This pattern suggests mounting selling pressure, and a breakdown below the support level might lead to a bearish move. **2.4 Flags and Pennants** Flags and pennants are short-term continuation patterns that provide traders with opportunities to capitalize on brief pauses within an ongoing trend: * **Flags**: These patterns resemble rectangular flags and are formed by parallel trendlines. Flags indicate a temporary consolidation before the trend resumes. Traders often look for a breakout from the flag pattern to enter trades in the direction of the prevailing trend. * **Pennants**: Pennants are small symmetrical triangles that form after a strong price movement. Similar to flags, they signal a brief consolidation period before the trend continues. Traders watch for a breakout from the pennant pattern to make trading decisions. By familiarizing themselves with these common chart patterns, traders can harness the power of historical price movements to predict potential future trends. Each pattern provides unique insights into market sentiment and dynamics, giving traders a strategic advantage when making entry and exit decisions. In the subsequent sections, we'll delve into more advanced chart patterns and explore the strategies used by professionals to extract maximum value from these formations. **Section 3: Advanced Chart Patterns** In this section, we'll explore more sophisticated chart patterns that can provide traders with deeper insights into market movements. These advanced patterns offer opportunities to forecast trend continuations, reversals, and potential breakout movements with increased accuracy. By understanding and mastering these patterns, traders can elevate their trading strategies to a new level of sophistication. **3.1 Cup and Handle Pattern** The Cup and Handle pattern is a longer-term continuation formation that often indicates a bullish trend continuation. This pattern resembles a teacup with a handle and consists of two main components: * **Cup**: The cup forms a rounded bottom, resembling a semicircle or a "U" shape. It indicates a gradual shift from a downtrend to an uptrend, where the asset's price recovers. * **Handle**: Following the cup formation, a brief consolidation occurs, forming a handle-like structure. This handle represents a short-lived pullback before the uptrend resumes. Traders often consider a breakout from the handle as a signal to enter a long position, expecting the bullish trend to continue. **3.2 Wedges** Wedges are patterns characterized by converging trendlines, suggesting a potential breakout in the near future. There are two types of wedges: * **Rising Wedge**: This pattern features a series of higher highs and higher lows, but with the upper trendline slanting more steeply than the lower trendline. A breakout below the lower trendline indicates a potential trend reversal or downward breakout. * **Falling Wedge**: The falling wedge has a series of lower highs and lower lows, but the lower trendline is steeper than the upper trendline. A breakout above the upper trendline suggests a potential reversal or upward breakout. Wedges can provide traders with insights into potential breakout directions, depending on the type of wedge and the prevailing trend. **3.3 Gartley and Butterfly Patterns** Gartley and Butterfly patterns are examples of harmonic patterns, which combine Fibonacci ratios and price symmetry to forecast potential trend reversals. These patterns are based on the idea that markets move in repetitive and predictable cycles. * **Gartley Pattern**: This pattern resembles the letter "M" or "W" on price charts. It consists of specific Fibonacci ratios that define the length of each leg of the pattern. Traders watch for a completion of the pattern, which can signal a potential reversal in the market. * **Butterfly Pattern**: Similar to the Gartley pattern, the Butterfly pattern is characterized by specific Fibonacci ratios that create a distinct shape. This pattern also indicates a potential trend reversal. Harmonic patterns require precision in identifying Fibonacci ratios and symmetry, making them a more advanced tool for experienced traders. By delving into these advanced chart patterns, traders can refine their skills and gain a deeper understanding of market dynamics. These patterns provide valuable insights into longer-term trend continuations, potential reversals, and breakout movements. As traders become proficient in recognizing and interpreting these formations, they can leverage their insights to make well-informed trading decisions that align with their overall trading strategies. **Section 4: Pro-Level Strategies** In this section, we'll delve into the strategies that elevate traders to a professional level by enhancing their chart pattern analysis. These strategies go beyond mere pattern recognition, providing a comprehensive framework for making informed trading decisions, managing risks, and adapting to changing market conditions. **4.1 Confirmation and Validation** While chart patterns provide valuable insights, it's essential to confirm their validity using additional tools and analysis techniques. Professional traders rely on the following methods to enhance the reliability of their trading decisions: * **Technical Indicators**: Incorporate technical indicators such as Moving Averages, Relative Strength Index (RSI), and MACD to corroborate the signals generated by chart patterns. For instance, a bullish chart pattern supported by bullish divergence on the RSI can provide stronger confirmation. * **Volume Analysis**: Analyze trading volume accompanying the pattern's formation. High volume during a breakout or reversal can validate the pattern's strength, indicating higher market participation. * **Price Action**: Study price behavior around key support and resistance levels to confirm the pattern's integrity. A pattern that aligns with significant price levels gains added credibility. By integrating these confirmation techniques, traders can reduce the chances of false signals and increase the accuracy of their trading decisions. **4.2 Risk Management** Managing risk is a cornerstone of professional trading. When trading based on chart patterns, risk management becomes even more crucial. Here are key risk management practices: * **Stop-Loss Orders**: Set stop-loss orders at logical levels, such as below support for bullish trades and above resistance for bearish trades. This protects capital by limiting potential losses in case the trade goes against you. * **Position Sizing**: Determine the appropriate position size based on your risk tolerance and the distance to the stop-loss level. Never risk more than a predefined percentage of your trading capital on a single trade. * **Diversification**: Spread your capital across different trades and instruments to minimize the impact of a single trade's outcome on your overall portfolio. * **Risk-Reward Ratio**: Aim for trades with a favorable risk-reward ratio. Professional traders typically seek trades with a potential reward that outweighs the risk by a certain multiple, like 2:1 or 3:1. **4.3 Pattern Failure and Adaptation** Not all chart patterns play out as expected. Professional traders understand that pattern failures are part of trading and have strategies to adapt: * **Cutting Losses**: If a trade based on a pattern starts moving against you and violates key levels, it might be time to exit. Professionals accept that not all trades will be winners and prioritize protecting capital. * **Adaptive Strategies**: If a pattern fails, consider adjusting your strategy based on new price developments. For instance, a failed bullish pattern might turn into a range-bound scenario, offering alternative trading opportunities. * **Market Context**: Always consider the broader market context. A pattern might fail due to unexpected news or changing market dynamics. Adapt your strategy based on the bigger picture. Professional traders understand that flexibility and adaptability are vital traits. Being prepared to pivot when patterns don't unfold as expected is a hallmark of a seasoned trader. By mastering these pro-level strategies, traders can enhance the accuracy of their trading decisions, manage risks effectively, and navigate the complexities of ever-changing markets. These strategies serve as the bedrock for maintaining consistent profitability and evolving as a successful trader over the long term. **Section 5: Putting Theory into Practice** In this final section, we'll bridge the gap between theory and real-world trading by delving into practical applications and guiding you through the process of creating a robust trading plan that integrates chart pattern analysis, risk management, and your individual trading objectives. **5.1 Case Studies** Case studies provide tangible evidence of how chart patterns can be successfully employed to navigate different market situations. By analyzing real-world examples, traders can gain insights into the intricacies of pattern recognition, confirmation techniques, risk management, and adaptation strategies. These studies highlight the nuances of making informed decisions in dynamic market environments. * **Example 1 - Successful Head and Shoulders Reversal**: Explore a case where a head and shoulders pattern accurately predicted a trend reversal. Analyze how technical indicators and volume corroborated the pattern's signals, and see how traders could have managed their positions and risks. * **Example 2 - Failed Cup and Handle Pattern**: Delve into a scenario where a cup and handle pattern did not lead to the expected bullish continuation. Learn how traders adapted their strategies and cut losses to mitigate potential risks. * **Example 3 - Breakout from a Symmetrical Triangle**: Investigate a case study showcasing a breakout from a symmetrical triangle pattern. See how traders identified the breakout point, confirmed it with volume and indicators, and managed their positions to capture the subsequent price movement. By studying these case studies, traders can gain a more nuanced understanding of how to apply chart pattern analysis in real trading scenarios and adapt their strategies based on market dynamics. **5.2 Developing Your Trading Plan** A comprehensive trading plan is the backbone of successful trading. It serves as a roadmap that guides your actions, ensures discipline, and helps you stay focused on your goals. Here's a step-by-step guide to developing a trading plan that incorporates chart pattern analysis: 1. **Define Your Objectives**: Clearly outline your trading goals, risk tolerance, and time commitment. Are you trading for income, growth, or a combination of both? 2. **Chart Pattern Strategy**: Specify the chart patterns you will focus on and the timeframes you'll trade. Define the conditions that must be met for a pattern to be considered valid. 3. **Confirmation Techniques**: List the technical indicators, volume analysis, and price action methods you'll use to confirm pattern signals. 4. **Risk Management Rules**: Detail your risk management rules, including stop-loss placement, position sizing, and risk-reward ratios. 5. **Adaptation Strategy**: Describe how you'll adapt your strategy in the event of a failed pattern or changing market conditions. 6. **Trade Execution Plan**: Outline your entry and exit criteria. Determine how you'll enter trades once patterns are confirmed and how you'll exit to secure profits or limit losses. 7. **Journaling and Review**: Emphasize the importance of maintaining a trading journal to track your trades, decisions, and emotions. Regularly review your journal to identify areas for improvement. 8. **Backtesting**: Test your trading plan using historical data to assess its effectiveness and refine your strategy. 9. **Continuous Learning**: Highlight your commitment to ongoing education and staying updated on market trends and developments. 10. **Emotional Control**: Detail strategies to manage emotions like fear and greed, which can impact decision-making. Creating a trading plan tailored to your skills, goals, and risk tolerance helps you approach trading with discipline and consistency. It provides a framework to make objective decisions based on a well-defined strategy rather than impulsive reactions. Conclusion: The journey through this guide has unveiled the intricate world of chart patterns, transforming theory into practical tools that empower traders to navigate financial markets with confidence. By immersing you in real-world examples and guiding you through the process of crafting a comprehensive trading plan, we've bridged the gap between theory and application. Mastering chart patterns is a transformative skill that separates seasoned professionals from the crowd. These visual cues serve as a unique window into market sentiment and price movements, offering traders a distinct advantage when making informed decisions. Armed with the knowledge of various chart patterns, the application of advanced strategies, and the lessons gleaned from practical examples, you are poised to unlock the potential to trade like a pro. Whether you're a novice seeking to elevate your trading acumen or an experienced trader looking to explore new dimensions of market analysis, this article stands as your indispensable guide. It equips you with the tools to navigate the complexities of financial markets, make informed trading decisions, and pave your way to success. As you embark on your trading journey, remember that mastering chart patterns is not just about understanding shapes on a chart – it's about deciphering the language of the markets and transforming that knowledge into profit. TCPLTP
VANTAGE:XAUUSDEducation
by TradeChartPatternsLikeThePros
2
Learn Fiboonacci Retracement & Extension Tools 📚 Hey traders, In this article we will discuss two very popular Fibonacci tools: Fibonacci retracement and extension. 1️⃣Fib.Retracement tool is applied to identify a completion point of a retracement leg within an impulse. As you know price action has a zig-zag form. For example, in a bullish trend, the price tends to set a higher high then retrace and set a higher low before going to the next highs. In a bearish trend, the price tends to set a lower low and retrace to a lower high. With retracement levels, we are trying to spot the point from where the next impulse in a bullish or bearish trend will initiate based on the last impulse leg. Fib.levels that we will apply are: ✔️0.382 ✔️0.5 ✔️0.618 ✔️0.786 The retracement levels will be drawn based on XA impulse leg. From its low to high if the impulse is bullish and from its high to low if the impulse is bearish. From one of the above-mentioned levels, a trend-following movement will be expected. One should apply different techniques to confirm the strength of one of these levels. Here is the example, how perfectly EURAUD respected 618 retracement of a bullish impulse leg after a pullback. Please, note that Fib.Retracement tool was applied based on candle wicks, not bodies. 2️⃣Fib.Extension tool is applied to identify a completion point of the impulse. In a bearish trend, the extension levels will indicate a potential level of the next lower low based on the length of the last bearish impulse. Fib.levels that we will apply are: ✔️1.272 ✔️1.414 ✔️1.618 The extension levels will be drawn based on XA impulse leg. From its low to high if the impulse is bullish and from its high to low if the impulse is bearish. From one of the above-mentioned levels, a retracement leg will initiate. One should apply different techniques to confirm the strength of one of these levels. Above again is EURAUD . Please, note how perfectly the pair completed a bearish impulse after the test of 1.414 extension of a previous bearish impulse. Of course other ways of application Fib.Retracement and Extension levels exist. However, these two are the most common. Let me know, traders, what do you want to learn in the next educational post?
Education
by VasilyTrader
9
Magic of Fibonacci Levels ✨In the realm of technical analysis, few tools capture the imagination of traders as effectively as Fibonacci retracements and extensions. Derived from the famous Fibonacci sequence, these levels offer insights into potential price reversals, extensions, and trend continuation points. In this article, we'll delve into the world of Fibonacci levels and explore how to use them to enhance your trading decisions. Understanding Fibonacci Retracements: Fibonacci retracement levels are like hidden treasures ✨ along a price trend. These levels, calculated from a swing high to a swing low, create horizontal lines that indicate potential support and resistance levels. The most common retracement levels are 23.6%, 38.2%, 50%, 61.8%, and 78.6%. How to Use Fibonacci Retracements: Identify a Trend: 📈📉 Begin by spotting a clear trend, either upward or downward. Select Swing Points: 🏞️ Locate the pivotal swing high and swing low within the trend. Plot Fibonacci Levels: 📏 Put those retracement levels on your chart, and watch as they highlight potential support or resistance areas. The Application: Support Levels: 💪🛡️ During an uptrend, traders often see retracement levels as potential buying zones. Resistance Levels: ☔ In a downtrend, these levels can be seen as possible areas to consider short trades. Understanding Fibonacci Extensions: Fibonacci extensions act like a crystal ball 🔮 projecting potential price targets or levels where the trend might extend. Extension levels include 161.8%, 261.8%, and 423.6%. How to Use Fibonacci Extensions: Identify a Trend: 📈📉 As with retracements, spot a well-defined trend. Select Swing Points: 🏞️ Determine the significant swing low and swing high within the trend. Plot Fibonacci Extension Levels: 📏 Add those extension levels to your chart, projecting potential price targets. Few examples : The Application: Projection of Trend Continuation: 🚀 Fibonacci extensions hint at where a trend might continue in its existing direction. Price Targets: 🎯 Traders often utilize extension levels to pinpoint potential price areas before a reversal might occur. Conclusion: Fibonacci retracements and extensions are like wizardry in the trader's toolkit. By grasping these levels and their applications, traders can create more informed strategies for entry, exit, and target levels. Remember, while Fibonacci levels are magical, they work best when combined with other technical indicators and chart patterns. As with any trading strategy, practice, experience, and risk management remain essential. With careful consideration and diligent analysis, Fibonacci levels can sprinkle a touch of enchantment to your trading endeavors. 📊✨
Education
by Yaroslav_Krasko
Mastering Elliott Wave: The importance of channelingI wanted to share my thoughts on the significance of using channeling technique in Elliott Wave theory when analyzing charts. To begin, we draw what we call a "base channel," starting from the beginning of wave 1 and extending it to the end of wave 2. This initial channel provides us with a foundation for analysis. The following occurrence of an impulsive breakout beyond this channel signals the initiation of wave 3. At this point, we create a new "Acceleration Channel" to track the movement of wave 3. If this newly drawn channel is breached to the downside, it suggests the possibility of a correction for wave 3 underway. As seen in the picture, the original base channel we drew earlier now acts as a support level for wave 4, accompanied by consolidation around Fibonacci levels. This observation has been witnessed numerous times in the past. When the corrective channel experiences a breakout with above-average volume, it serves as a signal indicating the completion of wave 4. This event provides an opportunity for us to establish Fibonacci targets for profit-taking. In this particular example, I have chosen to draw the corrective channel only on the final leg of the ABC correction, enabling us to catch the breakout at an earlier stage. A more conservative approach, however, would involve waiting for the breakout to occur after wave B has been surpassed. Hope this was helpful for those wanting to learn more about channeling and Elliott Wave.
TVC:GOLDEducation
by Ingvar77
Market Direction - Trend StrengthThe strength of a trend can be a key factor in predicting future price movements. This post will specifically cover how to identify trends, how to determine trend strength, and how to use it to your advantage when trading the markets. Characteristics of a Trending Market To begin, let us understand how to identify a trending market. A trending market is a market that is either making higher highs followed by higher lows (UPTREND) or lower lows followed by lower highs (DOWNTREND). What does this typically look like? Let's see: Uptrend Downtrend Now that we understand how to identify uptrends and downtrends, let's delve further and discuss how to use trend strength to your advantage when trading the markets. Fibonacci Retracement Tool The Fibonacci retracement tool is used in trending markets to determine how strong the trend is. It uses natural numbers to determine the high-probability price levels that the market will hit and continue in its initial direction. This method will use four Fibonacci levels: 38.2%, 50%, 61.8%, and 78.6%. One thing to mention is that in a trending market, the chart is made up of two waves: impulsive and retracement. After an impulsive wave, a retracement wave will usually form; after a retracement wave, the impulsive wave will usually form. The impulsive wave represents the strong momentum of buyers and sellers. The retracement wave shows the weakness of buyers and sellers. Therefore, we must look at the retracement wave when it comes to deciding the strength of a trend. For example, in an uptrend, the impulsive wave will be bullish; therefore, the retracement wave will be bearish. In a downtrend, the impulsive wave will be bearish; therefore, the retracement wave will be bullish. The retracement wave shows the strength of the opposite side of the market. For example, if the impulsive wave is bullish, buyers are stronger. Then, in the retracement wave, sellers will try to dominate the buyers. Therefore, the deeper the retracement goes, the stronger sellers will be than buyers, and the weaker the bullish trend strength will be. With the Fibonacci retracement tool, there are three scenarios to determine trend strength: Strong Trend Strength: 38.2% Fibonacci Retracement Moderate Trend Strength: 50%–61.8% Fibonacci Retracement Weak Trend Strength: 78.6% Fibonacci Retracement The above examples show why the Fibonacci retracement tool can be extremely effective in determining not only how strong a trend is, but also how likely it is to continue past the beginning of the impulsive wave. Bollinger Bands Bollinger Bands are very effective in reading trend strength. Bollinger Bands are based on price volatility, which means that they expand when the market is trending and there are big prices, and they contract during sideways consolidations when the market ranges. Bollinger Bands consist of two outer bands (top and bottom bands) on each side and a moving average in the centre between the outer bands (middle band). One of the main reasons Bollinger Bands are so effective in reading trend strength is that they do not lag as much as other indicators because they always change automatically with the price. Three important points to note when using Bollinger Bands to read trend strength: If price pulls away from the outer band and heads towards the middle band as the trend continues, this is a key indication that the trend strength may be weakening. During strong trends, prices stay close to the outer band and significantly away from the middle band. Repeated pushes into the outer bands that do not actually reach the band indicate a lack of trend strength. Let's see a chart example of Bollinger Bands reading trend strength: As you can see, using Bollinger Bands can provide traders with very useful information about trend strength and the balance between bulls and bears. Price Rejection We do not always need indicators or tools to read trend strength; it is possible to do this just by looking at a naked chart. The way rejected continuations or reversals happen on charts can be a huge indicator of being able to read trend strength. Before understanding the price rejection, it is important to know about the wick or shadow of the candlestick. Upper wick The upper shadow shows that the price went up and then came down again. This indicates that buyers wanted to increase the price, but sellers dominated the buyers to push the price back down. Lower wick The lower shadow represents that the price went down and then came back up. This indicates that sellers wanted to lower the price, but buyers dominated the sellers to push the price back up. Identifying price rejection Traders should first wait for the price to reach a strong support or resistance level. Then, at the support or resistance level, candlesticks will likely make wicks opposite the trend due to the strength of the level. For example, wicks or shadows will form on the upper side at the resistance zone, while at the support zone, wicks or shadows will form on the lower side of the candlesticks. These wicks or shadows are identified as price rejections in the market. Price rejections are very important, especially in identifying trend strength, because they accept or reject the identification of key levels in the market. For example, if you are unsure whether a support zone will hold or break, you can see whether price rejection will occur at that level. Let's see a chart example of price rejection and how you can use it to identify trend strength: The chart above is proof alone that trend strength can be identified by just looking at the price action of a chart. Understanding the strength of a trend does not have to be complex. Trend strength can be identified simply by using the three different techniques we have covered in this educational post. The best thing we can all do as traders is to be simplistic and not overcomplicate things; this becomes especially easier when you accept that nothing in the market is certain. Each market has its own unique market conditions and will not trade rationally all of the time. Therefore, when a trade does not go your way even though your trend strength signals were high and you followed the market, understand that it is just one trade and that the market is completely neutral. It is neither personally on your side nor personally against you. Trade safely and responsibly. BluetonaFX
Education
by BluetonaFX
37
FibDiv Strategy Explained by SkyrexioHello, everyone! One of the strategies which I use in my trading routine is FibDiv strategy. This strategy differs from other based on Fibonacci retracement, but in my opinion has higher win rate and clear rules to enter and exit trades. To apply this strategy follow the steps below. 1️⃣FIBONACCI RETRACEMENT SETTINGS Firstly you should set the additional levels to your Fibonacci retracement tool. You need to enter the following levels: 0, 0.5, 0.61, 1, -0.18, -0.27, -0.61. The zone between -0.27 and -0.18 is the first strong resistance. -0.61 is the final target. All these additional level should be appeared above zero level as you can see on the Chart 1. 2️⃣HOW TO FIND THE IMPULSE? FibDiv strategy is the trend following one. The idea is to identify the impulse and buy at the potential correction bottom. Here are the rules to correctly identify the impulse. 1.Start at the some local bottom point and follow the next candles 2.Stop at the point, where you will see 3 red candles. These candles should not obligatory be consequtive, but first red candle's open should be higher than second's and third's 3.Compare the highest green candle's close and next red candle's open. If close > open put the 0 Fibonacci level to green candle's high. Otherwise put on red candle's high 4.Place 1 Fibonacci level at the impulse start 5.We identified impulse🚀 3️⃣HOW TO OPEN TRADE? In our case we consider only long trade case. You can use the reverse logic to find short trades. When the impulse was identified we should wait for the price reach 0.5 Fibonacci retracement level. There we can consider the potential long setups on the lower time frame. For example if you use 4h go to 15-30 min to find the local setups which you used to use in your trading. Fib Div gave you the confluence zone where you can find any trades with higher probability. If you want me to tell you about these setups smash the rocket 🚀 button and I will share another article. If you are new in trading you can just buy at 0.5 - 0.61 level and put your stop loss below 1 Fibonacci level. 4️⃣WHEN YOU SHOULD CLOSE TRADE? If the price continues going down after reaching the buy zone and break the 1 Fibonacci level - Fibo is invalidated and trend is broken. Remove the Fibonacci and search for the next impulse. If your entry was right and price continues pumping the first target is zone between -0.27 and -0.18. You can close 50% of position here and for the rest part set stop loss at entry and wait for the final target at -0.618. Close the rest 50% here and remove the Fibonacci. Find the new impulse and repeat this approach. On the chart 2 you can find the proper setup for this strategy on Bitcoin. I need to tell you also that if you place your stop loss below level 1, you is going to have 1.5-2 : 1 risk to reward ratio. It's enough to make money, but not perfect. Advanced techniques finding entry point which I mentioned above will allow you to increase risk to reward ratio up to 5:1 or higher. Best regards, Ivan 🔥Guys, if you want me to tell you about advanced techniques from my experience follow me and smash the rocket🚀 button.🔥
Education
by Skyrexio
3