WEBVTT 00:02.760 --> 00:11.850 And this video I'm taking a look at Fibonacci retracement and extensions and Fibonacci is a mathematical 00:12.240 --> 00:14.680 pattern that tends to repeat itself in nature. 00:15.000 --> 00:21.570 If you want to know more about the actual numbers behind it and how they, you know, go about figuring 00:21.570 --> 00:29.550 out how the pattern was figured out in the 12th century by Leonardo Fibonacci, there's a ton of information 00:29.550 --> 00:29.880 on that. 00:29.880 --> 00:37.890 But suffice to say, it has a certain amount of predictive and repeatable presence in the world of nature 00:37.890 --> 00:42.180 and by extension, the world of trading. 00:44.190 --> 00:53.510 So clicking on the Gane and Fibonacci Tools submenu, you can pull up a fib retracement and a a fib 00:53.520 --> 00:55.230 retracement is simply. 00:56.370 --> 01:03.810 A ratio of distance that a trade goes before. 01:05.320 --> 01:14.520 It runs into a particular resistance barrier, so there are multiple Fibonacci retracement levels, 01:14.980 --> 01:21.040 without a doubt, although the three most important are thirty eight point two percent fifty percent 01:21.040 --> 01:22.640 and sixty one point eight percent. 01:22.660 --> 01:27.480 So what that means is from the drop to the bottom, because you're measuring the entire move here, 01:28.390 --> 01:30.220 this swing lower. 01:31.580 --> 01:35.870 And when it rallies, half of the move will have been collected here. 01:36.980 --> 01:44.540 With Fibonacci, you're looking to take the swing and see how far back can we pull before sellers come 01:44.540 --> 01:45.620 in and continue to push? 01:45.620 --> 01:51.590 And you can see we formed a perfect shooting star in the weekly chart here at the 50 percent Fibonacci 01:51.590 --> 01:52.420 retracement level. 01:52.910 --> 01:57.800 It's one of the most common ways to get involved is to look at the 50 percent, the thirty eight point 01:57.800 --> 02:02.780 two percent or the sixty one point eight percent levels and look for price action like that to trade. 02:02.780 --> 02:07.820 And quite frankly, that's a very simple, straightforward. 02:09.360 --> 02:13.740 Type of trade that you find yourself in, you wait for the price action first, though. 02:15.960 --> 02:17.340 As we go lower. 02:19.650 --> 02:22.950 You will see traitor's. 02:24.760 --> 02:31.150 Start from there and then I'll pull this up and it's at the 50 percent again, we got a hanging man 02:31.150 --> 02:37.450 here, which was a cell signal, and you continue to go lower from there, pretty straight forward trading. 02:37.450 --> 02:41.200 And Fibonacci does tend to work better on higher time frames. 02:42.370 --> 02:49.120 For example, you can do it like on a five minute chart, but really at the end of the day, it doesn't 02:49.120 --> 02:49.810 mean as much. 02:51.840 --> 02:53.490 Another thing is. 02:54.970 --> 02:59.290 Fibonacci extension, so you can do like a. 03:00.480 --> 03:03.270 Trent, face extension on the same move. 03:09.430 --> 03:14.860 And this represents the 50 percent retracement, but then you get these things, these extensions, 03:15.250 --> 03:20.170 one point six one eight or one hundred sixty one point eight percent. 03:21.560 --> 03:27.020 Extension, so this measures where can we go based upon the initial move? 03:28.180 --> 03:34.170 We've pulled back, we've entered, so we need a place to get out based upon Fibonacci extensions, 03:34.210 --> 03:38.260 that's the level you're looking for and we formed a double bottom just below it. 03:38.260 --> 03:39.340 It's pretty straightforward. 03:41.280 --> 03:46.950 Do you want to stay into this trade, I mean, you could and it certainly would have worked out, but 03:46.950 --> 03:48.300 since then we've bounced the bid. 03:48.510 --> 03:55.860 The double bottom again, price action has told you that the the the move lower is certainly running 03:55.860 --> 03:56.600 out of steam. 03:57.390 --> 03:58.800 This is a perfect setup. 03:59.400 --> 04:01.290 Typical type of. 04:03.260 --> 04:07.930 Fibonacci trading, but there's a lot of other things you want to pay attention to as well. 04:10.000 --> 04:17.010 Price action notice this is 40 dollars price action tends to form around these round figures anyways 04:17.590 --> 04:19.690 if you go back to the support resistance. 04:22.760 --> 04:27.440 Remember that I had talked about every ten dollars, so let me go ahead and. 04:37.160 --> 04:42.650 So notice that the 50 percent Fibonacci retracement level is just above thirty dollars, thirty dollars 04:42.650 --> 04:44.000 is what caused the trouble. 04:45.240 --> 04:50.790 We went down to 20, which is what causes the support, basically, we've bounced back here, we've 04:50.790 --> 04:53.970 fallen from there again and we've gone down to roughly ten dollars. 04:54.690 --> 04:58.260 So the best way to use these tools is to. 04:59.700 --> 05:04.260 Use the the tools themselves, because they do have a certain amount of predictive power, and I think, 05:04.260 --> 05:06.780 quite frankly, it's just herd mentality. 05:06.780 --> 05:09.110 I don't even know if there's any magic involved in it. 05:09.120 --> 05:12.150 It's just it works because people say it works. 05:12.780 --> 05:14.160 You have round figures. 05:15.530 --> 05:19.880 Here on the chart, and of course, you have price action, so if you can marry the three. 05:21.260 --> 05:26.420 This is how you properly use Fibonacci and you'll see examples of this. 05:27.770 --> 05:28.440 Everywhere. 05:28.580 --> 05:31.700 So let's go ahead and. 05:32.850 --> 05:34.440 See if we can find. 05:35.880 --> 05:37.860 Let's see what Tesla's got going on. 05:41.230 --> 05:45.880 So I'm going to go ahead and use the trend based extension, because it gives us both. 05:46.850 --> 05:54.440 We've had a nice, strong move all the way up to here, we pulled back here, so let's take a look at 05:54.590 --> 05:55.280 this trade. 05:58.530 --> 06:02.310 The first thing that you should notice is that we have. 06:03.330 --> 06:07.770 A pull back as we started to fall, you pull back to the 50 percent. 06:08.790 --> 06:11.370 And a hammer right there. 06:11.400 --> 06:12.610 Well, what else is there? 06:12.660 --> 06:14.060 One hundred and twenty dollars. 06:14.070 --> 06:15.540 It's a nice round figure. 06:16.810 --> 06:20.130 The move had initially tried to move to two hundred dollars. 06:22.180 --> 06:23.560 That caused the resistant. 06:24.650 --> 06:26.930 Notice that we made it. 06:28.670 --> 06:29.540 To the. 06:31.180 --> 06:34.820 The first extension, which is just at about three hundred. 06:38.080 --> 06:43.660 That being said, you can clearly see that there is a symmetric pattern going on here. 06:44.550 --> 06:51.930 These are all things that you can calculate, you've got the sideways action of the big figures, you've 06:51.930 --> 06:57.780 got the price action candlesticks, and then you've got the Fibonacci's remember when you're trading. 06:59.780 --> 07:03.410 You're always better off to have multiple reasons to be in a trade. 07:05.400 --> 07:09.900 That's going to be true if you're using Fibonacci or anything else, but but that's especially true 07:09.900 --> 07:16.050 in Fibonacci because what you want is a confluence of not only Fibonacci traders, but you also want 07:16.890 --> 07:19.310 people looking at it for multiple reasons. 07:19.320 --> 07:23.070 The round figure, if you remember previously, and support resistance. 07:23.070 --> 07:25.080 I talked about needing orders filled. 07:25.710 --> 07:27.620 So that comes into play as well. 07:29.190 --> 07:38.850 You clearly want nice big swings when you attach your Fibonacci retracement tool to the chart. 07:40.150 --> 07:40.720 You want. 07:41.660 --> 07:44.610 Them to be at extremes, if at all possible. 07:45.110 --> 07:47.570 So this massive extreme here. 07:49.980 --> 07:51.450 Certainly would qualify. 07:52.520 --> 07:56.120 And you're going to find that somewhere right around the. 07:59.020 --> 08:05.320 Thirty eight or so or the sixty one, we have bounced and taken off to the upside. 08:06.520 --> 08:08.440 Again, you can see how. 08:09.350 --> 08:17.450 Predictive they are, but you don't just put up a fib in trade that you put up a fib, you hope. 08:18.260 --> 08:23.630 And you become more interested in if it's at a place like 50 dollars and then you look for price action, 08:23.630 --> 08:26.870 if you get all three of those, then you have a winning set up. 08:27.770 --> 08:33.370 It's not a guaranteed setup, but there are enough things going on at the same time to get people interested.