Setups in Trading Crypto: Fib Retracements

By Altcoin Sherpa on ALTCOIN MAGAZINEDisclaimer: This is not financial advice and everything written is my opinion only. I do this for fun and trade as a hobby and am not an expert. These articles are for entertainment/educational purposes only.Introduction: This article will explain where you might enter with Fib retracements in crypto trading. I am going to be talking about bullish entries in an uptrend only in this article. These charts are all in hindsight and hindsight is always 20/20, but I hope you can still learn something from this article. I also know that people have ADD and have a hard time reading longer articles, so I am going to briefly explain my approach to fib entries/exits and try to keep this short, direct, and to the point.If you like this article, please follow @altcoinsherpaWhat are Fib Retracements?I’m going to link a bunch of articles here that will explain what fib retracements are better than I can.What Is Fibonacci Retracement and Where Do Its Ratios Come From?Fibonacci Retracement | Know When to Enter a Forex Trade article is about finding long entries on bullish trending coins. Oftentimes I see people asking “what is a good entry?” for a bullish trending asset. Fibs are a good way to look for entries (in addition to S/R areas).Checklist and Notes Before TradingTrade with the trend- This is the most important thing. Don’t look for longs in an HTF bearish trend; don’t look for shorts in an HTF bullish trend.Fibs can be used on all time frames. Higher TF fib levels = stronger. During extreme spikes/volatility, I have less success using fibs for very low timeframes. I use HTF S/R levels during those scalp trades..382, .50, and .618 are all typical good entry areas when marking bullish fib areas.Use Fibs with areas of confluence on the chart and HTF areas of support/resistance. It’s usually not wise to JUST use fibs alone for entries.Fibs can be used as both entries and exits. Again, use with HTF S/R areas.The more bullish/explosive the move, the less likely you will get an entry at .618 or even the .50 region on HTF charts. If the price goes to those areas, it may be a shift in market structure with a new bearish trend.Marking fibs takes practice but use the fib tool in addition to drawing S/R levels. You don’t need to mark the exact high or exact low if price is not respecting any of the fib levels in between. Play around with the fib tool and mark it with where price bounces (within reason, of course).Determining if price is doing a healthy retracement before going higher or if it is a bearish trend change is difficult. In my experience, if price retraces lower than the .618 fib decisively, I’m more likely to call that a bearish shift in market structure (and assume price is headed lower). The .50 region is always key as well.A healthy retracement in a bullish uptrend should show big volume on the push up, lower volume while price is falling down, and rising volume when price continues to push upward again (after touching some key fib levels).More on the above: Deciding to use wicks or candle bodies for your fib is more subjective, similar to horizontal vs trendlines. Again, use the fib tool to see where price is bouncing off.When thinking about final exit/targets, the previous range high (the top of where you are fibbing from) is usually a good spot. It’s common to see price hitting a double top before heading lower.Chart Entries/Exits Examples:BAT/BTC over 3 screenshots below:LINK/BTC after, observe the potential double top. Range highs are generally a good spot to TP.ZRX/BTC before and after:Buy the Dip or Change in MS?Deciding if there is a change in trend or if this is a healthy reversal is a tough thing to analyze. LINK above was one interesting one that I was wrong about while it was occurring. As I wrote before, the .50 region is very key in my experience for reversals.BTC/USD: You decide. Notes on the chart why this was bearish.RVN/BTC: Notes on chart. This ended up going up much higher. In chart #2, you can see a shift in MS to a bearish trend vs. a retrace.ConclusionI hope you learned a few things from this article. There are obviously many more things that I could add to it but I wanted to keep it short and a quick read. Fibs are subjective on where you can start and end (for the most part) and also remember that everybody has different styles/timeframes that they trade. I likely also forgot a few things so feel free to let me know if I did. If you enjoy this content, please follow me @altcoinsherpa on twitter.Altcoin Magazine in Trading Crypto: Fib Retracements was originally published in ALTCOIN MAGAZINE on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Author: Altcoin Sherpa

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