INTRODUCTION

Before we delve into the final chapter of our complete price action
book, it is important for you to understand the most basic concept
that when you look at a chart, you should not see candles or
numbers and lines. The true price action trader sees a chart and
sees orders, money exchanging hands and different traders taking
different trades in response to different news and events. The
intricate world of crypto or forex trading revolves not just around
numbers or news but also into the realm of market auction
psychology.

We will focus on Fibonacci retracements and tools particularly in

this tutorial. These lead to levels which are based on mathematical
formulae and are likely to act as support or resistance for price.
These levels have been accurate historically to predict patterns not
just in trading but other phenomena as well.

TELEGRAM: https://t.me/EmperorbtcTA
X : https://twitter.com/emperorbtc

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INDEX
1. Fibonacci Retracement ........................................................ 6
1.1 How To Draw Fibonacci Retracement Levels? ................... 6
1.2 How Do You Apply Fibonacci Retracement Levels in a
Chart? ................................................................................................... 12
1.3 Fibonacci Confluence ............................................................... 14
How to Make a High Probability Trade Using Fibonacci Tool? ..........................................14

1.4 Fibonacci Extension ................................................................. 19

2. Advanced Fibonacci Concepts .......................................... 21
2.1 The Golden Pocket .................................................................... 21
Setting Up The Golden Pocket. ..........................................................................................................22
Execution: ..................................................................................................................................................22
Example 1: .................................................................................................................................................23
Example 2: .................................................................................................................................................24

2.2 Additional Fib Levels ............................................................... 25

Range trading using the 70.2% level .............................................................................................25

2.3 Negative Fibonacci .................................................................... 29

Setting up your negative Fibonacci levels....................................................................................29
Example 1: Bearish scenario .............................................................................................................31
Bullish scenario .......................................................................................................................................32

2.4 Trend-Based Fibonacci Extension ....................................... 33

Setting Up Trend-Based Fibonacci Extension. ...........................................................................33
Setting up your Fibonacci Extension..............................................................................................35
Example 1...................................................................................................................................................36
Example 2: .................................................................................................................................................37
Actual Application: Bullish Scenario ..............................................................................................38
Actual Application: Bearish Scenario .............................................................................................39

3
 Why do Fibonacci levels work:
The Fibonacci ratios of 61.8%, 38.2%, and 23.6% are widely used in
technical analysis, particularly for charting price movements in the
stock market.

These ratios become especially relevant during significant upward or

downward shifts in asset prices. Generally, after a steep rise or fall, an
asset is likely to retrace a portion of that move before continuing its
trend. For example, if a stock price increases from $50 to $100, it
might retract to around $70 before possibly advancing to $120.

This is where the technique of 'retracement level forecast' is valuable.

It assists in determining potential levels to which a stock might retract.
Identified using Fibonacci ratios, these retracement levels are essential
for traders planning to open new positions following the current trend.
The belief is that these levels can signal the likely extent of a
retracement, allowing traders to strategically place their trades for the
future.

The precise reasons for the effectiveness of Fibonacci ratios in the

stock market are not fully understood, reflecting the ratios' occurrence
in various natural phenomena.

The Fibonacci Retracement tool is primarily effective because it helps

traders identify potential reversal points within robust, long-term price
trends. By determining where a price reversal might happen, traders
can make more informed decisions about when to enter or exit
positions, aligning their strategies with the asset's overall price actions.
This method offers a systematic way to assess market sentiment and
price direction, making it a favored instrument among traders for
dealing with the complexities of the stock market.

4
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5
1. Fibonacci Retracement
The most frequent daily application of Fibonacci numbers in your trading would
be using the Fibonacci retracement tool to obtain certain levels of interest. The
Fibonacci series is just a number sequence from zero, where the value of any
number in the series is the sum of the previous two numbers, for example: 0, 1,
1(0+1), 2(1+1), 3(1+2), 5(2+3) and so on. The Fibonacci numbers can be used to
identify retracement levels if there is an apparent uptrend or downtrend in price
movement.

The Fibonacci retracement tool is based on the Fibonacci series which helps
traders identify levels to enter new positions in the trend direction.

● Fibonacci retracement levels are horizontal lines that indicate where

support and resistance are likely to occur.
● Each level is associated with a percentage of how much of a prior move
the price has retraced. The Fibonacci retracement levels are 23.6%,
38.2%, 61.8%, and 78.6%. Traders use additional fib levels 66%, 70.2%,
etc. We will stick to conventional levels for the first part of this series.
● Using data from Fibonacci retracement, you can place an order and set
price targets. It is not advisable to use fib levels for stops. Although
helpful, you should not rely on Fibonacci alone in making a trade. Traders
often use other indicators to assess trends and make better trading
decisions accurately.

1.1 How To Draw Fibonacci Retracement

Levels?
The Fibonacci Retracement Tool in Trading view comes with the basic package
and does not require a paid subscription.

To access the tool, select the Fibonacci retracement tool located in the tools
panel on the left of your tradingview window (refer to the image on the right).

It is not included in your favourites by default, so you can add it by selecting the
star next to the tool icon and name.

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Figure 1. Fibonacci Retracement Tool

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To change the appearance and level settings, click the Fibonacci retracement
on the chart and then click on settings as shown alongside.

From the settings, you can change the colour of your horizontal lines and choose
what levels you wish to appear in your Fib Retracement tool. You may extend
the lines to the left or the right through the settings.

Should you wish to copy my settings, it is up to you. A trendline marker is

essential for a beginner to know exactly where your point A and point B are
located on the chart.

Background colours can be removed to have a better and clearer view of the
candles. Prices indicate market prices on each level of the Fibonacci sequence.
Levels can either be in values such as 0.382, 0.618, or 0.5 or percentages: as
38.2%, 61.8% and 50%, respectively.

Figure 2. Fibonacci Retracement Tool

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Figure 3. Fibonacci Retracement Tool - Style Settings

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 Figure 4. Fibonacci Retracement Tool - Coordinates

In the Coordinates properties dialogue box, you can precisely set the position
of the Fib Retracement by setting its trend line's position on the price scale (by
setting the price) and the time scale (by setting the bar number)

To familiarise yourself with Fibonacci Retracement Levels, pull up the tool on

Tradingview, and create a point of interest based on your previous swing lows
and highs. Plotting examples are provided below as reference.

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 Figure 5. Uptrend

In an uptrend, identify your previous LOW and previous HIGH (point A to point
B). Use the retracement to identify possible SUPPORT levels on your candle
stick chart.

Figure 6. Downtrend

In a downtrend, identify your previous HIGH and previous LOW (point A to

point B). Identify potential RESISTANCE levels on your candle stick chart
using the fib levels.

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1.2 How Do You Apply Fibonacci Retracement
Levels in a Chart?
Drawing Fibonacci retracement levels is a simple three-step process:

A. In an Uptrend (looking for future support):

Step 1 – Identify the direction of the market: uptrend

Step 2 – Attach the Fibonacci retracement tool on the bottom and drag it to
the right, all the way to the top. (Always pull your retracement tool from left
to right)

Step 3 – Monitor the three potential support levels: 0.236, 0.382 and 0.618

Figure 7. Applying Fib retracement on an uptrend

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Figure above of ADA/USDT shows upside momentum, reaching a high of
2.470 $ in May 2021 before a sharp retrace.

Let’s forget the rules and observe for a second. Just by observation, it is clear
that the 0.382 fib level is critical, which ADA tried to hold as support a couple
of times while the 0.618 fib level held as support thrice, leading to massive
bounces.

Monitoring the three potential support levels: 0.236, 0.382 and 0.618. In this
case, 0.236 (1.918 $), 0.382 (1.576 $) supports didn’t hold while 0.618 (1.024
$) did.

In a strong uptrend, the 0.382 Fibonacci level is generally held as support. If

it is lost, expect a retracement to 0.618. The 0.618 is possibly the most crucial
fib level to hold and in case it is lost on a candle closing basis, one can expect
upward momentum to stall.

B. In a Downtrend (looking for future resistance):

Step 1 – Identify the direction of the market: downtrend

Step 2 – Attach the Fibonacci retracement tool on the top and drag it to the
right, all the way to the bottom

Step 3 – Monitor the three potential resistance levels: 0.236, 0.382 and 0.618

Figure 8. Applying Fib Retracement in a downtrend

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We monitor the three potential resistance levels: 0.236, 0.382 and 0.618.

The rejection takes place at the 0.382 level twice. There’s also an initial rejection
from the 0.618 level. One key thing to keep in mind is that once you get a
rejection from one of the essential fibs (0.382 here) and that rejection proceeds
all the way to your low, then it is best to sit out of a trade or wait for a new swing
to draw a new fib retracement.

After a strong downtrend, you can only start to have confidence that there might
be a strong rejection from the 0.382 or the 0.618 taken from the fib levels of the
most recent swing.

A potential local bottom is in once the 0.618 fib level has been claimed.

1.3 Fibonacci Confluence

Fibonacci is primarily a tool used to add confluence to your trading. It is not
advisable to use fib retracement on their own, but a top-down analysis using
fibs for swings on each timeframe is an excellent way to do it regardless.

How to Make a High Probability Trade Using Fibonacci

Tool?
One should not rely solely on Fibonacci retracement and extension levels in
trading. Fibonacci tools can give the best results when combined with other
technical tools, such as volume profile, market structure, trend lines, oscillators
and other technical indicators.

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 Figure 9. Example of top-down analysis using Fib Retracement for Swings
on different time frames

Initial swing on the 4H time frame. We just take the most apparent high to low
swing.

Figure 10. Zoomed-in version of Figure 3

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We take the most recent swing on the lower time frame (1H) and trace our levels.
We notice a confluence with the 0.618 and the 0.786 levels. One could play the
first red arrow or layer limit short orders from the old 0.618 level to the new 0.786
level.

To know how to layer orders or manage a trade dynamically, always practice risk
management and keep in mind the evolving R concept by Dante. Read the risk
and trade management tutorials to understand completely. (link:
https://t.me/EmperorbtcTA/536)

Some more confluence can be added again by drawing the fib levels on the most
recent upswing.

Figure 11. Short Entry for Figure 4

The 0.236 levels from the two previous fib pulls + the 0.618 fib level from the
upswing being lost simultaneously provide a short trigger. As is evident from the
chart, it would be a great short entry in hindsight.

Another way to use Fibonacci retracements as the confluence is with other tools
we have covered so far.

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 Figure 102. Fibonacci Retracement as Confluence (Example 1)

The tool in itself seems fine but let’s drop a few time frames and see how we
could have sniped a better and risk-defined trade on this swing.

Figure 13. Zoomed-in version of Figure above

If you do not know how I got that 4H level, it is suggested to read the levels
tutorial first. (link: https://t.me/EmperorbtcTA/527)

Nevertheless, it is a basic support-to-resistance flip play with a bearish

divergence leading into the resistance which has the 0.618 fib level as
confluence. We place our stop based on market structure and get more than 3
R:R on this trade.

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 Figure 14. Fibonacci Retracement as Confluence (Example 2)

After a substantial down move and some sideways consolidation, we might look
to see some relief in the market, even if it is just a relief rally to get rejected.
Here, we see such a scenario. We draw our fibs on the last swing up and look for
a bullish retest of the 0.618 fib.

Figure 15. Zoomed-in Version of Figure 8

This is a trade I took using the confluence factors as shown on the chart. Naked
Point of Controls (nPOC) offer remarkable confluence in defining entry points in
ranges and using fib levels from larger swings can help define a high confidence
trade. Stops and Targets are based on the low and high at larger range extremes,

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it is advisable to rely on market structure for stops. You can use nPOCs as
targets as well but never as stop losses.

(I have a volume profile series that covers ranges and volume profile in detail
here: https://t.me/EmperorbtcTA/538)

1.4 Fibonacci Extension

Fib extension is an old term used commonly in the equities market by more
experienced traders. The modern term for it is simply the 1+ fibs, as in
Fibonacci levels that are based on Fibonacci percentages greater than 100%.

While Fibonacci retracement provides us with potential support and resistance

levels for price to retrace into within the swing high and low we use to trace it,
Fibonacci extensions measure a move to levels on possible areas where the
price may reverse.

These are extremely useful for future levels that the price has not reached yet.
Example: All Time High (ATH) territory and a low that price has not broken in a
long time, example: altcoins breaching 2017 or 2020 levels after a bull run
during the current bear market.

For this section, we’ll not show the conventional fib levels on the chart unless
needed to reduce the noise on the chart and have clarity in explanations.

Figure 16. Fibonacci Extensions

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Once the swing high here is broken, our normal thesis to potentially short the
0.618 fib level with confluence or so is invalidated. Thus, we look to get in a long
and after entry use the 1.618, 2.618 and so on for targets or take profit levels.

While I prefer to trade the range on the lower time frames, this tool comes in
handy when coins breach ATHs.

This has helped me take profits on a lot of my altcoin positions in 2021. Thus I
was in mostly cash after the November All Time Highs on most coins.

Figure 17. Fibonacci Extension – Example of Ethereum

The above is an exact illustration of how one could have nailed half of the bull
market using simple ranges, levels and fib retracement and extension tools.

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2. Advanced Fibonacci Concepts
For the second part of the Fibonacci series, we will be covering some more
important trading concepts based on Fibonacci. In the previous tutorial, we
covered how to utilise fibs for entries and partial exits; now, we’ll discuss the
all-important golden pocket, some custom fib levels that the top traders use
and much more.

2.1 The Golden Pocket

The golden pocket is the area where certain fib levels lie. Traders consider it
as the numerical values/percentages that price usually respects as an area of
support or resistance.

In trading cryptocurrency, the golden pocket considered by most traders is

the 61.8% or 0.618 level. In some cases, traders also use 0.66/ 66% or
0.65/65% on the Fibonacci retracement tool. Feel free to identify which, in
your opinion, works out for you after further backtesting.

My personal preference for the golden pocket is the region between the
0.618 and the 0.66. I believe the best way to trade when placing limits is
laddering. So when we use the golden pocket for entries, it is advisable to
ladder orders in this region. However, even if the entry is taken by laddering
orders, we will have a fixed stop loss for the entire position.

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Setting Up The Golden Pocket.

Figure 18. Setting up the Gold Pocket

We’re not using the 1+ or some other fibs for this section just to keep the charts
as clean as possible.

Execution:
There is no need for elaborate discussion regarding the golden pocket. When
trading on the Higher Time-Frames (HTF), it is vital that we consider only the

22
deep swings and then consider laddering orders inside the golden pocket region
if we have confluence for that zone.

Example 1:

Figure 19

When laddering bids while using the golden pocket, it is essential to pick “deep”
swings to draw your fib retracement on.

What do I mean by deep swings? The most apparent swing high and low for that
particular timeframe or even a higher timeframe (never a lower one).

Figure 20

23
Example of what is a valid or invalid “deep” swing. Fibs and golden pocket entries
are a potent tool, but it is critical to use the right swings to anchor your fibs on.

Example 2:
Sometimes, the price action can be choppy, and sudden movements might
hamper your read on the market. It is challenging to get the best swings in such
situations.

Figure 21. BTC 6H chart

Since it is hard to identify a clear swing high and low, we pick the best one
available on a higher TF. In these cases, it is best to zoom in and look for high
confluence entries inside the golden pocket region.

In the figure below (30m TF), it is apparent how volume profile levels alongside
the higher time frame golden pocket level can provide a good entry; you can
define risk by placing a stop loss above the previous range high.

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 Figure 22

2.2 Additional Fib Levels

Range trading using the 70.2% level

Figure 23

Many traders experiment with different percentage levels on their fib

retracement tool to try and find the most optimal level (for entry or laddering) for
their particular strategy. MindsetBTC is an excellent range trader who utilises
the 0.702 fib level; let’s see how to use it in practice.

25
Image above: While trading a range, first identify the range high and the range
low. This is an example of an ADA/USDT chart on the 15 min time frame trading
in a range after an extreme swing down. My bias due to order flow and BTC was
a relief bounce.

Figure 24

Image above: Upon tracing our Fibonacci levels, we can identify support levels
at 0.702 and 0.786, which can serve as our buying opportunity. When we are
looking to trade short-term ranges in the other direction (do not do this as a
beginner, the reason for my long bias was explained earlier), we can expect
retraces that are deeper than the golden pocket region. However, if we wait for
the 0.786 level to provide a reaction, we might get front run or lack conviction in
longing there.

For the above example, it is best to ladder orders from the 0.618 to the 0.702 or
0.786 fib level. I usually don’t place stop losses based on fib levels, but if the
0.702 level offers no reaction (not the case here), it is best to get an early exit
on the trade.

26
 Figure 25

Image above: Another example of trading short-term ranges using the 0.702
level. After identifying our support levels (we use these as targets), we can
anchor our fibonacci retracement along the range high and low to locate our
resistance levels. The support levels identified can help as targets. This can be
done repeatedly so long as the market does not break the current higher time
frame structure while in range.

Figure 26

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We notice price starting to range on the lower time frame in an uptrend.
However, we see some stalling after a reaction from our fib levels.

Figure 27

Image above: We utilise the fibs from the opposite direction in order to have an
early exit target. So you essentially use the range extremes in both cases (or use
an intermediate low/high) and get out of the trade earlier. This kind of range
trading is beneficial when you use other forms of confluence and get out of your
position by having multiple targets. I like to call this fib-to-fib range play.

28
2.3 Negative Fibonacci
Negative Fibonacci levels can be one of the additional tools while utilising
fibonacci retracements. It can be used to add additional confluence for entries
and target or take-profit (TP) levels.

When price action moves beyond your fibonacci range (0% - 100%), we can then
consider targets using our negative fibonacci values to anticipate where price
will find support or resistance. This tool can be used independently, but
additional confluence must always be considered before placing a trade. This
must be followed for all fibonacci strategies.

Setting up your negative Fibonacci levels

Exactly like how we added the 0.66 or 0.702 fib levels, we can enter our fibonacci
Retracement setting and add additional values. Colour code the numbers to
avoid confusion in your levels. I like to create different templates for when I use
different strategies based on fibonacci. You can do this via the button on the
bottom left corner of the image alongside.

Additional values to be added are:

-1% or -1

-23.6% or -0.236

-61.8% or -0.618

-161.8% or -1.618

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Figure 28. Negative Fibonacci

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Example 1: Bearish scenario

Figure 29. Bullish Scenario

This is a BTC chart on the 5min timeframe: As seen in this image, we can clearly
identify that the market is in a downtrend. On the lower TF, such trends contain
deep swings with a short-term range where you can short the retracement as
we have seen. However, if you just target the range low, you are missing out on
the prospective R you could have obtained from this trade.

It is advisable to target range or swing low in this example as TP1 and have
further levels to close the trade like -0.618 as TP2 and -1 as TP3. In practice,
using negative fib levels always implies reacting to the price. If we were to see
the price find support after breaching -0.618, we would move our stop loss to
entry or lower. We could also close the trade completely if the price seemed to
form a new range or showed signs of retracing.

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Further confluence to hold beyond the range low occurred as price action had a
break of structure at the 0% level and then retested it before continuation down.
This implied that the market could potentially move down further. Our take profit
levels can be identified using our negative Fibonacci levels of -23.6%, -61.8%
and -1%, respectively.

Bullish scenario

Figure 30. Bullish Scenario

Another scenario is this ETH chart on the 1H time frame: After an upswing, price
action goes through a short period of retracement just shy of the 0.618 fib level.
We can instead wait for price action to move for additional confirmation as seen
in this chart. We have set our buy limit order at 0.618 fib. As price finds support
there, we get more confirmation when it subsequently tests and holds the 0.5
and 0.382 levels. These are our opportunities to compound on the trade if we
have more confluence.

Once price action moves beyond our fibonacci anchor range (or the highest
point), we can then identify our targets based on the negative Fibonacci values.
It is recommended that we separate take profits into certain levels. In most
cases, - 0.236 and -0.618 should be prime targets or TP levels. It is important to
ladder entries and exits when taking trades based on fib levels especially if there
are no additional elements to add confluence.

32
2.4 Trend-Based Fibonacci Extension
In Fibonacci Extension, contrary to Fibonacci Retracement, there are 3 anchor
points instead of 2. The fibonacci extension levels are used to identify accurate
take-profit levels. They can also prove helpful in predicting future support and
resistance levels based off of the current swing high and low.

Setting Up Trend-Based Fibonacci Extension.

On tradingview, the icon for trend-based fib extensions can be found on the
column left-hand-side. Illustration in the attached image.

Figure 31. Setting Up Trend-Based Fibonacci Extension

33
 Figure 32. Setting Up Trend-Based Fibonacci Extension

Suppose you wish to do so. You can click the hollow star beside the icon so
that it can be easily accessible through your shortcuts.

34
Setting up your Fibonacci Extension

Figure 33 . Setting up your Fibonacci Extension

Double-click on the Fibonacci Extension you have plotted in your chart and
navigate to the settings.

For the trendline setting, you can have it checked to serve as your guide as a
beginner when plotting your extensions in the graph.

Secondly, you may wish to copy these percentages present in the image as this
is what I use.

35
Thirdly, you could optionally check the “Prices” check box so that accurate take-
profit levels can be seen as you plot your points in the graph.

“Levels” allows you to choose decimal or percentage values.

Example 1
Illustrated below is a simple drawing of how fibonacci extensions are primarily
used in a bullish scenario.

Figure 34. Fibonacci Extensions in a Bullish Scenario

A retracement point is identified in an uptrend, which becomes our third anchor

point. Our anchor plot points are as shown.

Point 1 (The lowest point) – this is where we will set initially anchor the 1st point
based on the current swing low. In this case, it is bullish price action.

Point 2 (The swing high / highest point) – Identifying the resistance from where
the retracement occurred. In this case, this will be your recent swing high.

Point 3 (The support) – Identify support levels where the price reacted after the
initial retrace. This could even be the golden pocket or 0.618 fib level while using
the usual fib retracement. Hence, this will be an area where you might have
considered buying opportunities or simply, the place where price found support.

36
With this tool, where we entered is not our concern, just identifying potential
targets. This is again particularly useful during bull runs when we want to identify
a target after a coin has breached All Time Highs (ATH) for spot positions.

Example 2:
Another example to understand the tool.

Figure 35

As seen in the image above, the previous lowest point at 0% and the previous
highest point at 100%. A Fibonacci retracement is then plotted to help us identify
our possible support levels. In this case, price movement retraced down to the
61.8% level and held it as support. This was a prospective buying opportunity.

Once our support level has been located, we can plot out our 3 points of the
Fibonacci Extension since we have already seen our 1: previous lowest point, 2:
retracement /resistance, and 3: Support level.

Considering that every asset has its own behaviour, I suggest doing some
backtesting in accordance with different time frames to get optimal results.

37
Actual Application: Bullish Scenario

Figure 36

Image above: This is a BTC 4H chart. We can clearly see a bullish uptrend
followed by a short period of retracement. Horizontal lines on the chart help to
clearly identify the previous low and the previous high for the most recent swing.

Figure 37

38
Image above: After entering a long position on the retrace (remember that we
are only exploring targets right now), we plot our Fibonacci Extension to
accurately predict our take-profit levels.

Going back to what we have learned, we will plot our Point 1 at the swing low /
lowest point, followed by our point 2 which is the swing high / highest point and
finally ending at point 3 which is our support level at 50%. Again, we must plot
on a wick-to-wick basis to measure our levels accurately.

We have our take profit levels as the 61.8%, 78.6% and 88% respectively. In some
cases, the market will tend to overextend further than our TP levels, but
regardless we should practice proper risk management and exit at the
predetermined levels.

Actual Application: Bearish Scenario

Figure 38

Image above: This is a BNB 15min chart. We can identify that the current trend
hit resistance and is retracing. For every big move, there should always be a
short period of retracement before creating the actual trend confirmation. In this
image, we can see the highest point (swing high) where price rejects before
forming a base and retracing a little.

39
 Figure 39

Image above: By practising what we have learned so far, we utilise our fibonacci
retracement for a short entry and some other confluence factors.

Figure 40

Image above: After plotting out the initial fibonacci retracement and identifying
our short entry, we will then plot out the 3 points of our Fibonacci Extension, as
shown in the image above.

Our take profit levels can then be set using the fib levels as mentioned above.

40
 CONCLUSION

If you’ve made it this far, congratulations on completing the

entire price action book

This was a representation of MY BEST and includes

everything I’ve learnt from experience and learnings I have
gathered from the best traders.

The only thing remaining in price action after covering all the
content covered here is practice and back testing.
Congratulations in completing one of the most comprehensive
courses and best of luck!

41