Hi Fellow Traders. Philip Thygesen here from

Stock-Market-Strategy. Before I start I just want to say that trading involves risk and

hard work. So please do your own due diligence before trading for real money. Today I am

going to talk about Fibonacci Retracements and Extensions. I will explain the theory

behind Fibonacci and then show you some charts about how Fibonacci works. Finally I will

give some tips about how to best use Fibonacci in conjunction with chart analysis. If you

go to our website www.stock-market-strategy.com you will find a tab called education, technical

analysis and Fibonacci Retracements/Extensions. Here you will find a written explanation including

an annotated chart. This is made to make it easy for you to keep track of the information.

You might even print this page out so you can have it in front of you while back testing

or writing your trading plan. Background Information About Fibonacci The Fibonacci sequence was

introduced to the West more than 800 years ago but we run into the Fibonacci sequence

on a daily basis such as playing card dimensions, Greek art, computer screen ratios, etc. Fibonacci

numbers are 0,1,2,3,5,8,13,21 and so on. It’s these numbers divided with each other that

give us the Fibonacci retracements and extensions areas. For example, the 62% retracement is

calculated by taking 13 divided with the next number in the Fibonacci sequence 21. So that’s

how we derive the 62% retracement. If you want to learn more about the calculation then

visit the website. Now with any support/resistance it’s important to understand that these Fibonacci

levels are more like zones. Price will often oscillate around these areas so they are not

hard reversal points but potential reversal points. It is therefore important to use Fibonacci

retracement with other indicators and/or chart analysis. Many traders keep an eye on these

numbers and that makes it a self-fulfilling prophecy. Support/resistance is about finding

areas price will bounce/reverse off. And you can do this by making qualified guess that

there will be many traders to buy/sell the securities at certain areas. If, for example,

you know the Fibonacci Retracement/Extension levels in advance you can predict where there

will be a larger than normal amount of buyers/sellers. How To Trade Using Fibonacci Retracement Here

is one way to use the Fibonacci Retracement for trading. This is a less known way to use

it but nevertheless it’s quite useful. Here we are seeing an uptrend in the stock. We

have a Fibonacci Retracement placed at the high of the move from the low of the move.

We see that we are forming a triangle but we are forming it above the 38%. This means

that the momentum is still strong to the upside because the pullback is less than 38% it’s

almost not pulling back. It shows the buyers are still very aggressive to buy every dip

there is. Here you see the same chart but I have added Fibonacci Extension. So let’s

continue our trade. We go from the low of the up move to the high and then down to the

low of the triangle. The low of the retracement. From there we predict the resistance areas

in this up move. So if you were long you would look at those areas to see if there were any

resistance so we need to book our profit. For example we predicted that there would

be more than a normal amount of sellers waiting because of the Fibonacci Extension. This is

where the self-fulfilling prophecy comes in. We see this bar forming and almost look like

a Doji. It opens, pushes up, pushes down, pushes up and closes almost unchanged. These

bars can be interpreted as a reversal bar. So when you see that happening at your extension

you get more evidence saying it might be a good time to book the profit or partial profit.

Trading Using Fibonacci Retracement/Extension With Chart Analysis Here is a third way to

use Fibonacci Retracement/Extension. I have combined them again but I am also using some

chart analysis. Here first we have our up move, up to the high and we see that it retraces

38% or around 38%. We also see that the Fibonacci Extension from that down move. If people were

short they might take the profit at the Fibonacci 62%. So we get confluence around this area.

And so add to that evidence we also come back to what were resistance is now support. People

who went short over here are happy to short cover their position when they get back to

breakeven. That’s why support is now working. And here we add all 3 things together to give

us a high odds entry. We are using Fibonacci Retracement of the overall move. We are using

Fibonacci Extension of the retracement move and we use normal chart analysis such as support

resistance. This gives a high odds trade. This ends today’s video. I hope you have enjoyed

it. Please remember to subscribe to the channel so you don’t miss out of future videos. Please

to subscribe to the free newsletter on our website www.stock-market-strategy.com.

@phlighty No problems. Thanks for the comment.

You should try combining fibonacci retracements with fibo fans, fibo fans can explain a reason on why the price just seems to reverse even if it does not touch the fib retracement area yet.

:D…

Wow the trader speaking sounds competent, and the information being talked about is actually useful in the real world/market, bravo.

@DouglasIIII Thank you very much for your kind words.

why do people use red on black? I can't see red on black.

@meesphht Sorry to hear that. We are using black chart simply because it is easier on the eyes when we look at charts for so many hours.

what charting software are you using

@KluizyKT Check private message

what chart software are you using?

on the second part of the video,the head&shoulders pattern is obvious and thats a trade for a short positon,but this strategy is for a long position with fibs,so the two strateys are acutally conflicting,i spose it depends on which direction the larger time frames are going to make a final desision

Already said yes, but what charting software do you use ?

Cheers.

Jeg kan høre du er dansk !

dont understand anything……

Check private message

Check private message

Thanks for the video, is there any chance you could private message me the software please?

why all these people are so concerned about the software being used? It is all about your trading strategy and your skills which make you a good trader. Try to learn the video, Don't worry about the software. another great video by stockmarketstrategy.

I agree. The software is only a tool in your trading. Even the best software out there will not make you profitable if you are lacking the education and/or discipline.

whats the software?

Most people don't give information on the time frame of their chart analysis. I was wondering what general time from do you look at? Day? Months? Years?

This is a daily chart. You can see the date in the bottom of the chart.

For trading, It's all about the experience, the more you work with it the better you get at it. But don't spend too much time in the game, cause it'll start to kill you. "words of wisdom from my father"

Why do you set the retrace net top in the middle of the chart rather than at the top of the actual high bar? On the extension I see you did low bar to high bar to low retraced bar but on the fib retrace you didn't use the top of the high bar.

If you are talking about approximately 1.10 mins in then it is simply to explain how the retracement works. If it was live trading then I would of course always use the recent price action.

Very good advice your father gave you…..

Thanks nice information……

How do you determine where to set the 100% and 0% marks?

Normally you just take the low of the move and the high of the move. However sometimes you might adjust the low or high if the these are created on the basis of a spike in price. If price haven't really traded at the price more than a split second then you might want to take the close of that bar.

excellent! i never understood the extension targets. Your extension from triangle makes sense. I am v. impressed. Specially recently i'm growing to view Fibonacci retrace/ext to be very powerful tool N may even in coming days call it THE main tool a trader should master. Would you agree? or do u have feel other ALT. tools think are better. Ofcourse the default understanding is NO tool tops the money mgmt/position sizing. your insight please.

Really good video ! 🙂 thank

That first pull back that didnt reach the 38%, if you had the 23% line on then I guarantee it would of lined up with it when it pulled back, a 23% retracement is a ultimate uptrend, how come you dont use the 23%? and also the 76% is extremely useful after you predict the top of a trend you can go off 50% and tell a future low by dragging it down to the original 50% of the previous trend

Yes Fibonacci is the main tool a trader should master, I've studied it a long time, it works so well if not perfectly if used properly because the universe is built around it, if that makes sense

thanks for technic

bull shit….fibonacci does not work….plain charting is the best way to make money

1337

nice one. thanks

Now I'm practicing with fibonacci on 1D and CSR on 4H, later will add fibonacci extension on 1D

I only watched this once as a neophyte in the stock arena, but how is this anything more than numerology? I must be missing something. I guess if every single trader based their moves on this kind of indication it would be more useful, but psychologically that is absurd. I don't know, I must be missing something as this just seems ridiculous, heh.

it works if everybody believes it works, then you can predict where money moves and bet accordingly.

Can't argue with that.The more tech.stops are lined up at the same time,the harder it gets for the market to pull a surprise move on you,unless at the multi signal stop happens at a job number or CPI data release.Thankfully,they only happen,once a month.

Real Pros don't use any of this stuff, not even charts…all the technical analysis junk is for retail traders that don't make money in trading.

Interesting comments below. That being said, if anyone is looking for the actual link that is being talked about in the video, here it is:

http://www.stock-market-strategy.com/?video=fibonacci

Thank you Phillip , it was valuable to me

How to Color Fibonacci Lines by different colors

What is the minimum timeline that you can trade, use Fibonacci?

– Hour Bars or Day Bars or 15 minute intervals?

Can Fibonacci be used on Equities? Or is it really just good for Currency?

for the record you didn't specify how to draw the second fibonacci extension, which makes most of this pointless

plus you should hide future performance so we can see how it would play out when you don't know imminent performance of the stock at hand. when it is clear that it will keep going up because you show it, that doesn't help someone who is looking at future periods with no filled in values(because it hasn't happened yet)

hi

Is there a way to show Fib support/resistance lines on the trading screen?

Great video. In the 3rd example, (using the larger uptrend fib and the smaller retracement fib) what gave you the indication to draw the smaller blue one to where it was? The 0% is at the top of the correction but the 100% isn't in line with anything. Yes the 62% is in line with the bottom of the retracement but you can do draw the fib to line up like that with any graph.

nice work

Great work. Very helpful for the novice student

Thanks..Good video..

Fibonacci is cool tool, 👍