Fibonacci Tools - Crypto Academy / S6W4 - Homework post for pelon53 by @kawsar
Today in this post I will share with you my Homework Task (Season 6/Week-3) for Professor @pelon53. The course professor @pelon53 has discussed with us "Fibonacci Tools".
I have learned a lot about Fibonacci Tools from this lecture of the professor. which are very important for a trader. So i start to this task today and I think it is very important for crypto trading.
Fibonacci retracement is a technical analysis tool, through which a trader can easily identify the key levels of support and resistance by drawing on a chart. If we add this Fibonacci retracement to our chart, we will see that this Fibonacci retracement is formed in our chart at the horizontal level and helps to identify support and resistance. Using Fibonacci retracement a trader can detect trend direction very quickly and accurately set stop loss and take profit point.
We must know that when a market is trending, the price of that market does not move in a straight line but it moves in retreat as it moves in trend. Makes lows. And if a trader understands these retracements correctly, then he understands these retracements well and then he gets a chance to make a good entry in order to gain in that trending market.
When this retracement occurs in a trending market, a trader does not realize how far this retracement can go or how far retracement can occur. In that case the Fibonacci retracement tool works much better to understand the retracement better. This Fibonacci retracement tool helps a trader a lot in understanding retracement, where retracement can happen in the trending market. We see that the Fibonacci retracement tool has different levels and these levels act as support and resistance levels in the trending market.
There are also different levels of Fibonacci retracement tools in a trending market, the level at which asset price retracement takes place. Using the Fibonacci tool ratio, the Fibonacci ratio is usually 0,1,1,2,3,5,8,13,21,34,55,89,144. Here each number is the sum of previous 2 numbers. The percentage of fibonachi ratio is 23.6%, 38.2%, 61.8%, 78.6% etc. We will see an example of Fibonacci retracement in the chart below.
Above I have shared a screenshot. I have taken this screenshot from the TradingView platform and we can see here that the downtrend market that I have given is a retreat after some time in the downtrend market and we can detect this replacement with Fibonacci retracement tool.
Fibonacci Extension is a very effective tool for every trader, through which one can easily estimate how far the price is likely to go before a pullback. Because we know that in every trending market, pullback happens when the price moves in its trend. And with the help of Fibonacci Extension tool a trader sets an entry point with the idea of pullback and there he can make profit by taking entry. So it is also a very useful tool for every trader to do technical analysis.
If we use the Fibonacci Extension tool with the Fibonacci Retracement tool, we can get much better results. Because we can identify reversal points through Fibonacci retracement. Since we can determine the pullback through the Fibonacci extension tool after we have identified it, a trader can find a good entry point by combining these two. With Fibonacci Extension we can find support and resistance levels, so a trader can continue researching very well before making an entry to gain for his trade from here.
Many times we see this Fibonacci extension level reacting to price movements, which is why it acts as a support and resistance level. We can understand with the Fibonacci extension how far it can go in an uptrend market if it starts moving upwards and how far it can go before the downtrend market starts falling. The Fibonacci sequence ratio is calculated on the Fibonacci extension.
The Fibonacci Extension is drawn from one point to the other. Uptrend market is plotted from low point to high and downtrend market is plotted from high point to low. This time we will see an example of this from our Tradingview chart.
Above I shared a screenshot. I took this screenshot from the TradingView platform on the LUNA / USDT pair, in a 30 minute timeframe. Here I have added Fibonacci Extension in a downtrend market and here I have seen that C level price has touched 1 of Fibonacci Extension. This means that the price has come down so far. Here we can set the take profit.
Fibonacci Retracement is calculated mathematically, before drawing on the Fibonacci Retracement chart it takes a recent high and a recent low from the price. At this stage we will look at the calculation method of Fibonacci Retracement.
- R = X + [ ( 1 - % Retrace 1 / 100 ) * ( Y – X ) ]
X = Fibonacci retracement begins where the strating value of the price.
Y = Fibonacci retracement ends where i.e. the highest value of the price.
Fibonacci Retracement Values are:
% Retrace 1 = 23.6%
% Retrace 2 = 38.2%
% Retrace 3 = 50%
% Retrace 4 = 61.8%
% Retrace 5 = 78.6%
Let's calculate the Fibonacci retracement for levels 0.618
X = 62.50
Y = 83.90
Formula
R = X + [ ( 1 - % Retrace ) * ( Y – X ) ]
R4 = 62.50 + [(1 - 0.618) * (83.90 – 62.50)]
R4 = 62.50 + [(0.382) * (83.90 – 62.50)]
R4 = 62.50 + 0.382 * 21.4
R4 = 62.50 + 8.1748
R4 = 70.6748
value confirmed from below screenshot.
Let's calculate the Fibonacci retracement for levels 0.236
X = 62.50
Y = 83.90
Formula
R = X + [ ( 1 - % Retrace ) * ( Y – X ) ]
R1 = 62.50 + [(1 - 0.236) * (83.90 – 62.50)]
R1 = 62.50 + [(0.764) * (83.90 – 62.50)]
R1 = 62.50 + 0.764 * 21.4
R1 = 62.50 + 16.35
R1 = 78.85
value confirmed from below screenshot.
At this stage I will do a real trade, I will use BINANCE exchange to do this real trade. To do this trading I will do research through Fibonacci Retracement and take entry. To do this trade, I selected the ADA / USDT pair and set a time frame of one hour.
In this screenshot above we can see that there was a sideway market and after the sideway market an uptrend has started here. One thing we know is that when the uptrend starts in the market, but it does not go straight to the top, but it starts to go up by creating higher and higher Lows in the market.
There was a retreat after the uptrend started and the market went down, so I made an entry here. We get a good position here for the retreat that happened here. We have made Stop Loss and Tech Profit for this study by using this Fibonacci Retracement. The price at the time of entry was $ 0.732.
Real trade proved by binance mobile apps screenshot from my verified account.
At this stage I will trade a demo, I will use the tradingview platform to trade this demo. Trading View is one of my favorite platforms for doing trade research and demo trading. To do this trading I will research and enter through Fibonacci extension. To do this trade, I selected the LINK / USDT pair and set a time frame of one hour.
In this screenshot above we can see that an uptrend has started here. One thing we know is that when the uptrend starts in the market, but it does not go straight to the top, but it starts to go up by creating higher and higher Lows in the market.
There was a retreat after the uptrend started and the market went down, so I made an entry here. We get a good position here for the retreat that happened here. We have made Stop Loss and Tech Profit for this study by using this Fibonacci Extension Tool. Price at the time of entry, $14.61 was Take Profit Set $15.51, Stop Loss $14.00.
Finally, I would like to say that the Fibonacci Tools that we have discussed today are very important and very effective tools for technical analysis. A trader can easily find his entry point in any trending market with the help of Fibonacci Tools. You can also find support and resistance points. And with Fibonacci Tools you can better understand where to set the tech profit and stop loss and where the retreat will be in the uptrend market. So a trader of these Fibonacci Tools. You can easily make his trading decisions through In that case we can say that Fibonacci Tools is a very essential tool for a trader.
I would like to thank the professor very much and thank him very much for discussing such an important topic with us and for gifting us a lecture on his well explained. I have learned a lot from today's task and learned a lot. .