For me this is the most essential trading tool. Fibonacci Retracement – Using support and resistance.

I remember looking at my first Bitcoin chart and thinking “Oh, awesome!” – Now what? Especially when Bitcoin was touching $19,000 (I’m not bitter about not buying £100’s worth still, honest!)

I believed for a long while that these movements were fairly random and there must be some sort of luck involved in managing to work out where to place a buy or sell trade. I considered it to be ‘trading bots’ automatically knowing when to trade.

However, I have a very determined personality and refused to give up looking for the “key” to trading. These movements were too structured to be just luck.

If only I could work out what this is doing, where is it going?

After months of searching I actually found a pretty effective way.

Now, going back over the last 2 years I have entered into many trades due to FOMO (Fear Of Missing Out).

I was always entering late as the price was rising to only get severely frustrated, as no sooner did I enter the trade, the price came back down again.

If only I knew then what I know now!

I know I keep going on about it, but the big imaginary chart that everyone is following does actually come in to its own using Fibonacci Retracement (Fibs).

I will briefly go over how to use this tool, which should help you set your buy in target price and your sell target prices.

Using this tool, so far, has been the only way that I have made any successful trades, and got a little bit of profit. I haven’t made loads, but a win is a win, right? – A couple of pints worth back in the bank. (Well, Tether)

So, if you want to stop making random trades and be able to follow what the market is actually doing, here is how to do it.

Okay, so here is Bitcoin as a blank canvas:

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Not too exciting, now what?

Now we go get our Fibonacci Retracement drawing tool.

On the left side of your TradingView chart you will see a bar full of drawing tools. It is in here that lays what I consider the key to successful trading.

You’re looking for this section:

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Click this box and then you will be presented with a whole lot of drawing tools.

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Are you ready for some trading magic?

This will show you where most of the buy and sell trades are being made.

First of all we need to identify our ‘Swing Low Point’. Now, on this daily chart that is easy as we have just had a ‘double bottom’ occur over the past few weeks. If you’re looking at the 15 minute chart or 1 hour, 4 hourly, etc then you need to identify where the ‘Swing Low’ is.

The ‘Swing Low’, in this case, is here:

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A really important point. Notice the two candles end and start at the same price. Never use the ‘Swing Low’ on the wick, it won’t work! The candle needs to be like this:

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Place the Fibonacci Retracement drawing tool at the bottom of the candle and drag it to the current ‘Swing High’ (Highest point) – Remember to only place it on the candle at the ‘Swing High’ point, we’re not interested in using any of the wicks.

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Suddenly we can see!

There are all your daily Fibonacci Retracement points. In classic fashion Bitcoin has just bounced between the lower and higher Fib over the past 3 days. These are the points you would be looking at when figuring out buy and sell areas.

Clever, huh?

Why does this work?

It is due to support and resistance lines. By using indicators and trading tools such as waves, trend lines, channels etc, we can work out where Bitcoin, or any other cryptocurrency, has entered into ‘oversold’ territory.

The beauty of it is everyone else is always looking for these points as well.

This means the price is likely to rise again, although you must manage your risk well, you should be able to place a buy in trade.

When using Fibonacci Retracement (Fib) lines I always now tend to have a sell price in mind.

I will always use a stop loss when entering into a trade, just to be safe.

I trade using Binance exchange and if you use their exchange correctly you can set a “take profit” level.

Take profit for me is to close my trade and wait for the next adjustment in move, either re-enter later if the price moves up or wait until it has fallen and repeat the process again of “Buy Low / Sell High”.

So, there you have it. No more rushed trades. Patience, as I’ve said before, really does pay off.

Always keep in mind. Don’t be greedy! If you miss anything this time, or close to early, just wait. Another trade will be coming around soon. Bitcoin has been doing this over 10 years, with plenty of movement.

What if I told you that it is possible to do the same, but when the price is falling? Exciting stuff! – How about being able to roughly guess where the falling price may actually bounce?.. Follow me to the next section:

How I use ‘FIB Extension’ – Fibonacci Extension (It’s coming down, I’m yelling TIMBER!)

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