trend lines the fibonacci retracement

hey guys welcome back to another episode in this video we will be going through our very simple yet
profitable sma fibonacci trendline trading strategy if you want more videos more often please smash
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content is released the very important point before we start everything we discuss in this video can
be used for currency trading stock trading and crypto because price action stays relatively consistent
across different assets so we're going to go very in depth in this video there are multiple ways to
trade using the fibonacci retracement tool but i have found that one of the best ways to trade the
fibonacci is by using it with trend lines the fibonacci retracement tool was developed by leonardo
pisano who was born in pisa italy the city of the leaning tower in about 1175 a.d pisano was known
to be one of the greatest european mathematicians of the middle ages he developed a simple series
of numbers that created fibonacci ratios describing the natural proportions of things in the universe
these numbers have been used by traders now for many years fibonacci levels work best in trend
markets and do not provide any benefit in ranges with this fibonacci trading strategy you will learn
everything you need to know to start trading with the fibonacci retracement tool here is a picture of
the different ratios that leonardo created we will get into detail later on as to which of these lines we
will use for our trading strategy your charting software should come standard with these ratios
however you are the one that puts them on your chart many traders use this tool which is why it is
important to have a trading strategy that incorporates this you are going to need to know where to
apply these fibs you will need to place them on the swing higher swing low so here is what it would
look like then on your chart with the fibonacci retracement and here's a quick way to remember this
concept if it's an uptrend you want to start with the swing low and drag your fibonacci level all the
way up to the swing high if it's a downtrend you start with the swing high and drag your cursor all
the way down to the swing low simple enough let's go ahead and look at all we will need with this
trading strategy trading tools for fibonacci trendline strategy first fibonacci retracement second
trend lines third moving average indicator this trading strategy can be used with any market forex
crypto stocks options and futures it can also be used on any time frame this is a trend trading
strategy that will take advantage of the retracement of the trend forex traders identify the fibonacci
retracement levels as areas of support and resistance because of this these levels are watched by
many traders which is why this strategy could be a difference maker to your trading success since we
know some information about the fibonacci retracement let's look at the rules of the fibonacci
trendline strategy rule number one find a trending market traders need not buy the bottom or sell
the top either in fact many successful traders simply focus on catching part of the move the key is
knowing when a strong trend has developed and when it may be coming to an end here is a useful
tool for trend identification that may help keep you on the path of the trend moving averages
moving averages are a simple yet powerful tool for spotting a market trend if you are looking to
catch the larger longer term trends then the choice of moving average used should be longer the
type and length are a matter of preference some traders will simply look at the 50-day simple
moving average others may use a crossover strategy in which they wait for a cross of a shorter
moving average such as the 50 to go above or below a longer moving average such as the 200
whichever moving average you decide to use they can provide a simple means of determining
market trend rule number two draw a trend line since you already identified that it is in fact a trend
by looking at your chart and moving averages formation now you need to draw your trend line draw
this on the support and resistance levels as the trend is going up or down trend lines are a key
component of trading and i always recommend using them when you can once you draw this trend
line you are good to move on to the next step rule number three draw fibonacci from swing low to
swing high now you can get your fibonacci retracement tool out and place it at the swing low to the
swing high remember this is an uptrend so we started at the swing low 100 and place the second
zero percent level at the swing high rule number four wait for the price level to hit trendline so far
we found a trending market drew a trend line to validate this and placed our fibonacci at the swing
low and swing high this rule is the critical step to the strategy so you need to pay close attention
because we need the price moves to hit your trend line stall and go back in the direction of the trend
if it breaks the trend line and keeps going and blows past the 50 61.8 percent and 78.6 then the
trend is obviously broken and you need to look elsewhere because a trade with this strategy would
be invalidated at that time with that being said let's look at our chart and see what happened great it
hit the trend line so why can't we just go ahead and buy now since it is an uptrend well if you ask
that good question as i said the market tends to follow these lines but sometimes it will fake traders
out and they will end up losing a lot of money when it breaks the trend this happens every single day
which is why it is critical to have a strategy that will help you know if this break may occur and we do
not want any of that to happen to you so let's check out the criteria to enter to help us make a safe
entry rule number five price must hit trendline in between 38.2 percent and 61.8 percent lines this is
fibonacci golden ratio before i start to explain look at the chart to see what this exactly means the
price retraced all the way back and tested the 50.0 fibonacci line for quite a while before hitting the
trend line and continuing to go to the upside once the price hit the trend line that we drew we saw
that it was in between 38.2 and 61.8 percent lines and then our trade was one step closer to being
triggered why does it have to be in between these lines for this strategy we want to capitalize on the
big retracements and the 38.2 50 and 61.8 percent lines have all been proven to be the best
retracement lines to use with the fibonacci once you find this look for an entry rule number six entry
point so everything is lined up to make a great profit on this retracement what is the last step to
make the trade in the buy in order to make your entry you will wait for the price to close above
either the 38.2 percent or 50 percent line in a cell in order to make your entry you will wait for the
price to close below either the 38.2 percent or 50 line let's check out the charts to clarify this refer
back to this example when you use this strategy this shows us what our charts will look like before
we make a trade note if the price hit our trend line in between the 50 and the 61.8 fibonacci line
then we would wait for a candle to close above the 50 line to enter the trade the only reason to wait
for a candle to close above the 50.0 fibonacci line is because it is in between the 50.0 percent and
61.8 percent lines for this example this process should not take very long as our trend should
continue upwards because of the previous support level with the trend line rule number seven stop
loss placement your stop loss can vary based on what your charts are showing you look in the past
for prior resistance or support in the example trade the stop was placed below the 61.8 percent
fibonacci line rule number eight your target levels what are fibonacci target levels the fibonacci
targets are great because they provide great exits in a trend the most important fibonacci targets are
first 0.00 second minus 0.272 third minus 0.618 fourth minus 1.618 you can add these targets by
clicking on your fibonacci properties and then adding these levels to your fibonacci retracement tool
make sure to add the minus sign here are other examples of fibonacci trendline trading strategy
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so [Music] do [Music] do [Music] [Applause] [Music] do [Music] fibonacci levels can also filter out
trade ideas no trader would want to go long or short in front of a big fibonacci level and their trade
idea would be invalidated due to the situation as always if you learn something new or if you want
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show your support see you next time [Music] you