Price Action & Income presents... 

The Fibonacci Factor: 

Step-by-Step Trading Guide 
Leverage Important Fibonacci Levels to Enhance Your Trading Profits 

By Senior Trader & Technical Analyst, Richard Krugel. 

 
  

Thanks for downloading my eBook!

My name is Richard Krugel, and I’m the Senior Trader and Technical Analyst 
at Price Action & Income. 

Before we dive in, I want to give you a brief backstory about the concepts 
you’re going to see in this eBook. 

Firstly, I am a r​ eal​ trader that trades for a living. Like so many traders out 
there, I had a ​very​ difficult path to becoming consistently profitable. 

After spending thousands of dollars on gimmicks and so-called “expert 

advisers,” trying to make an honest living from trading, I was at wit’s end. 

So I started developing my own strategy.  

I combined a few powerful analytical techniques that compliment each 

other very well, and after a few years of rigorous back testing and 
experimenting, it resulted in a low-risk, high-yield strategy that has 
performed extremely well for me over the years. 

I’ve always wondered how much money, time, and effort I could have saved 
if I had my strategy sooner, however, which is why I genuinely market my 
strategy:  

To help fellow traders understand price action for what it is, and to trade it 
with discipline. 

 
  

​ ichard Krugel 
-R

 
*Please Note​: My trading methodology is aimed at achieving one specific 
goal: 

Finding the end of corrections and entering low risk trades when the trend 
resumes again. 

 
 

 
  

Introduction:  

What are Fibonacci Ratios and why should you use them? 

Leonardo of Pisa, also known as Fibonacci was a famous Italian 

mathematician during the middle ages and the first to write about a special 
sequence of numbers. 

When these numbers were added up in a certain way, they resulted in a 

ratio that can be used to describe the special proportions or building blocks 
that exist within nature. 

Today these ratios are known as Fibonacci ratios, and the most popular 
ratio of all is 1.618, or the inverse of that (0.618). Mathematicians and 
scientists refer to this number as t​ he golden ratio​.  

As in nature, Fibonacci ratios work ​very well​ in the world of financial trading 
when performing technical analysis.  

They are a very reliable indication of future support and resistance levels, 
and price action almost magically tends to gravitate to and react from 
them. 

In this eBook, we’ll cover the two main ways of performing technical 
analysis with Fibonacci ratios: ​Fibonacci retracements​ and ​extensions​. 

 
  

Before You Get Started…

 
Please remember that this eBook will only scratch the surface of what 
you’ll need to know to truly m
​ aster​ the markets. 
 
Yes​, Fibonacci Ratios are an incredibly powerful resource to have at your 
disposal, but you’ll still need to work hard to develop the rest of your 
strategy and the rest of your knowledge. 
 
If you want the shortcuts to ​really​ master this stuff, I put together a 
three-part video training that will show you how to use these techniques as 
part of a low-risk trading strategy for ​any​ market condition. 

You’ll be ​fully​ immersed in the approach I’ve been perfecting for over ten 
years, and you can grab the first training session for just $14.  
 
Click here to get started. 
 
Now, on to the Fibonacci strategy… 

 
  

The Fibonacci Factor 

 

Fibonacci Retracements 
 
The most commonly used retracement ratios are: 
 
0.382 % 
0.5 % 
0.618 % 
0.786 % 
 
Let’s use an example of how Fibonacci retracement levels can be used in 
an upward trending market: 
 
 
 
 
 
 
 
 
 

 
  

 
 
 

 
 
A great way to determine where a pullback or correction that moves 
opposite from the main trend will end, is to use Fibonacci retracements.  
 
Our first chart above is that of Gold and shows most of the upward trend 
that this commodity experienced in 2016. 
 
To use Fibonacci retracements a trader will connect a low on a chart with a 
high that materialized after that low (in an uptrend) and by doing this try to 
determine where that pullback may find support again. 
 
 

 
  

 
 
I marked most of the corrections with red arrows, and a closer look shows 
how well each correction found support and reversed back up again from a 
Fibonacci retracement ratio. 
 

Fibonacci Extensions 
 
The most commonly used extension ratios are: 
 
100 % 
138.2 % 
161.8 % 
178.6 % 
200 % 
 
The following example shows how Fibonacci extension levels can be used, 
but this time in a downward trending market: 
 
 
 
 
 
 
 

 
  

 
 

 
 
When Gold experienced a downward trending phase that ended around 
December 2016, Fibonacci extensions could have been used to determine 
where price may find future support. 
 
Fibonacci extension ratios work well in determining where a trend may find 
support (in our example) and when price does find support either a 
correction might follow or a trend can come to a complete end. 
 
Analysts or traders that use Fibonacci extensions will connect 3 points on a 
chart.  
 
 

 
  

 
 
In our example a high will be connected with a low and then with a lower 
high again.  
 
The Fibonacci extension drawing tool will then project expanded ratios 
downwards and these levels will be closely watched for support or change 
in trend. 
 
I drew two sets of Fibonacci extensions.  
 
The first one is indicated by little black arrows and the second set with little 
red arrows. 
 
The green arrows show how well these Fib extension ratios offered support 
as soon as price reached them. 
 

Using Fibonacci Levels as Part of a Strategy 

 
Although Fibonacci ratios work well to find levels of support or resistance, I 
do not use them on their own when making trading decisions.  
 
I have found over the years that using a combination of different proven 
methods work better than relying on one alone. 
 

 
  

 
 
Instead I like using a combination of the following: 
 

● Multi timeframe analysis 

● Corrective pattern recognition 
● Market geometry 
● Momentum divergence 
● Reversal candlestick patterns 

 
My strategy in a nutshell was developed to determine the main trend and 
then to join that trend at the end of corrections with as little risk as 
possible. 
 
What follows will be a brief overview of these methods followed by a real 
example of a recent trade I took when combining all these methods into 
one. 
 

Multi Time Frame Analysis 

 
When I trade I use 3 charts i.e. a 4 hour, 30 minute and 5 minute chart.  
 
 
 

 
  

 
 
Each time frame serves its own purpose with the 4 hour chart showing me 
the trend and when a correction is most likely to occur by using my Fib 
ratios. 
 
My intermediate 30 minute chart is used to look at price action a little 
closer and to determine which corrective pattern might be developing.  
 
I then use various market geometry techniques to pinpoint where that 
correction is most likely to end. I again use Fib ratios on this chart when 
needed. 
 
The smallest time frame I use is a 5 minute chart.  
 
This is an important chart as I use it as an entry confirmation tool that 
filters out the bad setups from the good, thereby increasing my probability 
of success on any particular trade while keeping my risk to a minimum. 
 

Corrective Pattern Recognition 

 
Since my strategy relies on finding the end of corrections, I have made a 
serious study of what corrective patterns look like and have found ways to 
exploit their individual characteristics that they tend to repeat over and over 
again. 

 
  

 
 
Knowing what these characteristics are and using techniques such as 
market geometry and Fibonacci ratios, in combination with this knowledge, 
has helped me to pinpoint the end of corrections with a high degree of 
accuracy. 
 

Market Geometry 
 
Market geometry techniques aim to define market structure as all markets 
display geometric formations that are repetitive in nature.  
 
The most common market geometry tools used today are pitchforks and 
channel lines and they can offer a good indication as to where price might 
be heading to in the future or find support/resistance.  
 
I only use pitchforks as a reliable way of finding the end of corrections. 
 

Momentum Divergence 
 
My strategy relies heavily on pure price action and the only indicator I use is 
a MACD histogram which is loaded on my 5 minute entry chart.  
 
 
 

 
  

 
 
The term momentum divergence simply refers to when price keeps moving 
in one direction but the force or momentum of that move has started to 
decrease.  
 
We shall take a closer look at this later. 
 

Reversal Candlestick Patterns 

 
There are hundreds of candlestick patterns that traders can follow to tell 
them various things.  
 
I use a select number of these patterns to confirm the areas I want to trade 
from, as they tend to pop up when price is getting ready to reverse.  
 
They therefore make a great addition to my overall strategy by telling me 
it’s time to enter high probability setups with little risk. 
 

Putting It All Together 

 
Now that I have covered all the methods I use in my strategy, I will next 
show you a real example of a trade on the AUD/USD currency pair that puts 
all of these methods into action in a systematic fashion. 
 

 
  

 
 
Step 1: Determine trend and use Fibonacci extensions on 4 hour chart 
 

 
 
Using simple trend lines, I was able to determine that AUD/USD has broken 
its previous intermediate blue trend line to the upside and its previous 
market structure (red horizontal line).  
 
So the intermediate trend at that time was upwards making me search for 
long entries. 
 
Using my Fibonacci ratios tool I connected the 3 swings (black arrows) to 
project my Fib extension ratios upwards, assuming that price will find 
resistance at one of those levels giving me a corrective pattern. 

 
  

 
 
One can see that price started a corrective pattern when it hit the 1.786% 
Fib ratio. 
 
Step 2: Identify corrective pattern and where it might end on 30 minute 
chart 
 

 
 
It was not until around the 20th December 2017 that I became confident 
that AUD/USD was forming one of my favourite corrective patterns i.e. a 
Symmetrical Triangle correction.  
 
 
 

 
  

 
 
When I trade these particular patterns I do not use pitchforks, but I knew 
that if this was a Symmetrical triangle that I could define it by labelling it as 
A-B-C-D-E.  
 
I know that these patterns always consist of 5 such waves AND that each 
wave tends to end at Fibonacci retracement levels. 
 
These are the characteristics of corrective patterns I was talking about 
earlier and knowing these sort of things provides me with the confidence to 
trade setups with a high degree of probability and confidence.  
 
Just look at which Fib ratio levels each wave reversed from! 
 
I knew that wave E would terminate at one of my Fibonacci retracement 
ratios giving me enough time, in advance to prepare myself for an entry. 
 
Step 3: Look for momentum divergence and reversal candlestick patterns 
at area of entry 
 
 
 
 
 

 
  

 
 

 
 
The last step in the process was to first spot momentum divergence (at the 
area I identified before) and then secondly look for a reversal candlestick 
formation to confirm an entry. 
 
The MACD histogram is loaded on the bottom panel of my 5 minute chart 
and it showed that although price was moving downwards into my entry 
zone that momentum was drying up or diverting from what price was 
doing.  
 
This is called momentum divergence and most reversals at the end of 
corrections will display this phenomenon. 
 

 
  

 
 
All that I had to do next was to wait for one of the reversal candlesticks I 
track and I got that confirmation when the green reversal candle appeared 
right at my area of entry.  
 
This meant that I could now proceed to place a buy order slightly above 
that candle with a stop loss just below it. 
 

Trade Results 
 

 
 
Following the above mentioned process enabled me to enter a trade with 
very little risk, right at the end of the correction, before price resumed the 
intermediate trend that I identified on my 4 hour chart. 

 
  

 
 
My target was set at the start of the correction that I identified and price 
reached my target in quick succession resulting in a profit that well 
exceeded the risk I took on. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
  

Conclusion 
 
Using Fibonacci ratios to find areas of support or resistance can provide us 
with many tradable opportunities, especially when used in combination 
with additional methods that follow a systematic approach. 
 
Remember: ​Fibonacci ratios only form a small part of my overall 
methodology, but it’s an ​extremely​ important component of the whole. 
 
I use a c
​ ombination​ of proven techniques to form my complete approach. 
 
In the highly competitive world of trading, stacking the odds in your favor 
requires a strategy that relies on a systematic approach—in which each 
part has an important role.  
 
This allows you to break down price action into manageable, 
“bite-sized”chunks to find entries with very low risk (and ​massive​ profit 
potential). 
 
If you’re ready to see how you can build an entire strategy around these 
tools, I​ urge you to check out my Propulsion Method. 
 

 
  

 
 
I packed a ton of detail into this video-training series, and it illustrates the 
whole process—​from start to finish. 
 
Thanks for reading along, and don’t forget to check out the Propulsion 
Method training h
​ ere​. 
 

 
 

 
  

Looking Ahead: More of My Methodology

We’ve only scratched the surface of understanding market structure and

how to trade within it.

If you’d like to see my complete trading strategy – plus my own exact entry
criteria for finding the highest profitability trades that most traders
completely miss – I highly recommend my video training.

It’s called the ​Propulsion Method​, and it’s the next step in learning how to
master market structure and take control of your trades.

Click here to grab the first video for just $14.

 
  

In my Propulsion training, you’ll quickly discover:

● How to spot 100%, 300%, and even 800% ROI trades, including
REAL examples of these exact types of trades – and how to manage
those positions until you take profit

● How to apply a specific set of Market Geometry tools to find these

entries – including the most overlooked tool in your trading platform

● How to see through the “noise” and identify natural market movement

● How it all ties together and how you can start applying it to your
trades right away

Click Here to Get Started 

 
  

 
 
 
 
 
 
 

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