The UNFAIR Fibonacci Trading Strategy (THE ENDGAME)
Summary
TLDRThis video outlines a top trading strategy that integrates Fibonacci with price action, applicable across stocks, options, cryptos, and currencies. It covers how to use Fibonacci tools for trade entry opportunities, the psychology behind their effectiveness, and combining them with support/resistance levels and areas of confluence for higher trade quality. The video also emphasizes the importance of trade quality and provides a detailed example of a Bitcoin trade using this strategy.
Takeaways
- π The video introduces a top trading strategy that combines Fibonacci with price action, applicable to various assets like stocks, options, cryptocurrencies, and currencies.
- π The Fibonacci tool and levels are important for identifying trade entry opportunities and act as key support and resistance levels in a trend.
- π To use the Fibonacci retracement tool, traders can click on the chart, drag the tool upwards, and lock it in to see the Fibonacci levels appear.
- π Fibonacci levels are traditionally used by traders to enter trades in an uptrend when the price pulls back to these levels, acting as support, and in a downtrend when the price pulls back, acting as resistance.
- π§ The psychological aspect of Fibonacci levels is based on herd mentality and self-fulfilling prophecy, where many traders look to these levels for trade opportunities.
- π‘ Fibonacci levels represent areas of value during a moving trend, offering better entry points for trades.
- π The video emphasizes the importance of combining Fibonacci levels with key support and resistance levels or areas of confluence to increase trade quality.
- π Trade quality is defined by the attributes and factors that influence the success of a trade opportunity, and understanding this concept is crucial for effective trading.
- π The video discusses the use of higher time frames (monthly and weekly) for more accurate market direction and the importance of multi-time frame usage for trade confirmation.
- π The strategy involves identifying high-quality trade traits such as trend trading, breakout momentum, fresh trends, and using Fibonacci retracement levels in combination with other indicators.
- π The final step in the strategy is to use lower intraday time frames for the key entry and exit strategy and entry tool, ensuring precise trade execution.
Q & A
What is the main focus of the video?
-The main focus of the video is to explain a top trading strategy that combines Fibonacci with price action, applicable across various asset classes like stocks, options, cryptos, and currencies.
Why is the Fibonacci tool important in trading?
-The Fibonacci tool is important because it provides trade entry opportunities at areas of value during a moving trend, acting as key support and resistance levels which can lead to high-quality trade entry opportunities.
How do you access the Fibonacci retracement tool on a trading platform?
-To access the Fibonacci retracement tool, click the button on the left, scroll down, and select 'Fib retracement'. Use it by clicking on the chart, dragging the tool upwards, clicking again to lock it in, and then observing the Fibonacci levels appear to the right.
What is the significance of the 50 and 61.8 Fibonacci retracement levels?
-The 50 and 61.8 Fibonacci retracement levels are significant because they represent deep pullbacks during a moving trend and are considered areas of high value, making them prime locations for potential trade entries.
How do traditional traders use Fibonacci levels to enter trades?
-Traditional traders use Fibonacci levels to enter trades by going long when the price pulls back to these levels in an uptrend, as they act as support, and going short when the price pulls back to these levels in a downtrend, as they act as resistance.
What is the psychological reason behind the effectiveness of Fibonacci levels?
-Fibonacci levels work due to herd mentality or a self-fulfilling prophecy, where many traders subscribe to these levels to identify trade opportunities, adding additional confluence to areas already being watched for trade opportunities.
What is the problem with using Fibonacci levels in the traditional way?
-The problem with using Fibonacci levels traditionally is the assumption that price will reverse solely because it is at a Fibonacci level, without considering other market factors, making it insufficient on its own.
How does the video suggest improving trade quality using Fibonacci?
-The video suggests improving trade quality by combining Fibonacci levels with key levels of support and resistance or areas of confluence, which increases the likelihood of a successful trade.
What is the concept of trade quality and why is it important?
-Trade quality refers to the attributes and factors that influence the chances of success of a trade opportunity. Understanding trade quality is crucial as it helps traders to identify high-quality trades with a higher probability of success and true momentum.
Can you provide an example of how to apply the Fibonacci tool in an uptrend?
-In an uptrend, to apply the Fibonacci tool, you would click where the swing low is, drag the tool to the top of the moving trend (swing high), and observe the Fibonacci level percentages that appear, indicating areas of potential pullback and value.
What are the steps to identify a high-quality trade using the Fibonacci tool combined with other factors?
-The steps include identifying the trend direction, locating key support/resistance levels, observing price action at these levels, applying the Fibonacci tool to find areas of value, and combining these with other factors like trend lines, moving averages, and areas of confluence to increase trade quality.
Why is it necessary to wait for price action confirmation at the Fibonacci levels?
-Waiting for price action confirmation at Fibonacci levels is necessary because it verifies that the market is indeed reacting to these levels, which can confirm the trade opportunity and increase the probability of a successful trade.
How does combining Fibonacci levels with areas of confluence enhance trade opportunities?
-Combining Fibonacci levels with areas of confluence enhances trade opportunities by creating a scenario where multiple trading schools are looking to take action at the same time, increasing the probability of the trade going in your favor due to the collective momentum.
What is the final step in the trading strategy discussed in the video?
-The final step in the trading strategy is to go to lower intraday time frames and use a key entry and exit strategy and entry tool to determine the exact points for entering trades, setting stop losses, and placing profit targets.
Why is it important to use multi-time frame analysis in trading?
-Multi-time frame analysis is important because it allows traders to see the bigger picture while also identifying immediate trends and potential trade entries. It helps in confirming trend changes and avoiding false breakouts by observing price action across different time frames.
How does the video demonstrate the application of the trading strategy using Bitcoin as an example?
-The video demonstrates the application of the trading strategy using Bitcoin by showing how to identify key support/resistance levels on higher time frames, observe trend changes on lower time frames, and use the Fibonacci tool in conjunction with trend lines and moving averages to pinpoint high-quality trade opportunities.
Outlines
π Introduction to Fibonacci and Price Action Trading Strategy
This paragraph introduces a new video episode focused on a top trading strategy that integrates Fibonacci with price action. It emphasizes the importance of this strategy for traders across various asset classes, including stocks, options, cryptocurrencies, and currencies. The video promises to cover unique concepts not found elsewhere and to showcase a significant Bitcoin and crypto trade example. Viewers are encouraged to interact by liking, subscribing, and turning on notifications to stay updated with new content releases.
π€ Understanding Fibonacci Tool and Its Significance in Trading
The script explains the importance of the Fibonacci tool and levels in trading, highlighting how they can identify trade entry opportunities and act as key support and resistance levels within a trend. It provides a step-by-step guide on how to use the Fibonacci retracement tool on a chart, demonstrating how to apply it in both uptrend and downtrend scenarios. The explanation includes how Fibonacci levels indicate areas of value and potential reaction points in the market.
π The Psychology Behind Fibonacci Levels and Their Effectiveness
This paragraph delves into the psychological aspects of why Fibonacci levels are effective in trading. It discusses the concept of herd mentality and self-fulfilling prophecy, where many traders' reliance on Fibonacci levels can create additional confluence for trade opportunities. It also touches on the idea that Fibonacci levels represent areas of value within a trend, allowing traders to enter at better price points relative to the market's past movements.
π Combining Fibonacci with Support and Resistance for Enhanced Trade Quality
The script outlines a method to improve trade quality by combining Fibonacci levels with key levels of support and resistance. It explains that identifying past price reactions to certain levels canι’η€Ί future reactions, thus creating potential trade opportunities. The paragraph also discusses the use of the Fibonacci tool in conjunction with these key levels to find high-quality trade entry points, emphasizing the importance of the 61.8 percent Fibonacci retracement level as a particularly valuable area of entry.
π Advanced Fibonacci Application with Confluence Areas
This section introduces the concept of using Fibonacci levels in conjunction with areas of confluence to further enhance trade quality. Areas of confluence are defined as zones where multiple trading signals align, increasing the probability of a successful trade. The script provides a detailed example of how to identify and capitalize on such confluence areas, including the use of trend lines, moving averages, and candlestick formations to confirm trade opportunities.
π Fundamental Trading Lesson: The Concept of Trade Quality
The paragraph introduces a foundational trading concept: trade quality. It stresses the importance of understanding trade quality to avoid being at a disadvantage in trading. Trade quality refers to the attributes and factors that influence the likelihood of a trade's success. The script encourages traders to focus on identifying high-quality trades rather than simply categorizing trades as right or wrong, and to learn more about price action to improve their ability to recognize high-quality trade opportunities.
π Key Trade Quality Traits for Successful Trading
This paragraph presents a comprehensive list of high-quality trade traits that traders should look for to increase the probability of a successful trade. It covers various aspects such as trend trading, breakout momentum, fresh trends versus trend exhaustion, higher time frames, multi-time frame usage, divergence, Fibonacci retracement levels, trend lines, moving averages, areas of confluence, candlestick patterns, chart patterns, and the quality of support and resistance levels. Each trait is explained in the context of how it contributes to the overall quality of a trade opportunity.
π In-Depth Strategy Application: Fibonacci with Support/Resistance and Confluence
The script provides an in-depth look at how to apply the trading strategy by combining Fibonacci with key levels of support and resistance, as well as areas of confluence. It walks through the process of identifying a trade opportunity, listing high-quality traits, and explains the importance of each identified trait. The paragraph uses specific examples to illustrate how these traits come together to create a high-quality trade opportunity, emphasizing the need for price action confirmation through candlestick formations at the area of confluence.
π The Importance of Trend Change Confirmation Patterns
This paragraph discusses the necessity of trend change confirmation patterns in trading. It explains the conflict that can arise when the big picture trend and the immediate trend are pointing in opposite directions and how this can lead to a stall or a larger trend change. The importance of using trend change patterns to confirm that the short-term downtrend has ended and that the larger uptrend can continue is highlighted. The script also emphasizes the need for multi-time frame analysis to avoid being misled by false breakouts.
π Multi-Time Frame Analysis and Trade Execution
The script illustrates the importance of using multi-time frame analysis in trading. It provides an example of how to identify a trade opportunity by first recognizing key levels and momentum on higher time frames, such as the monthly and weekly charts, and then confirming trend changes on lower time frames, such as the daily chart. The paragraph explains how to use trend lines, moving averages, and Fibonacci levels in conjunction with price action to identify high-quality trade opportunities and avoid false signals.
π Bitcoin and Crypto Trade Strategy Application
This paragraph showcases a real-world application of the trading strategy using the example of a massive Bitcoin and crypto trade. It describes how the strategy was applied step by step, incorporating concepts from previous paragraphs, to capitalize on a significant market movement. The script highlights the importance of reacting to market signals and entering trades in the direction of the herd, as well as the use of higher time frames for accurate market depiction.
π Daily Time Frame Analysis for Trend Confirmation and Trade Entry
The script focuses on the daily time frame analysis to confirm trend changes and identify trade entries. It explains how to use price action on the daily chart to validate the trend change from the weekly time frame and to find precise entry points for trades. The paragraph emphasizes the significance of trend line breaks and higher high patterns as trend change confirmations and discusses the final steps of the trading strategy, including the use of intraday time frames for entry and exit decisions.
π― Entry and Exit Strategy for Optimal Trade Management
This paragraph introduces the concept of a detailed entry and exit strategy for trade management. It mentions the importance of knowing exactly where to enter and exit trades, where to place stop losses and profit targets, and how to manage open positions to maximize profits and minimize risks. The script also hints at additional high-quality trade traits and content available on their website, wisetrade.com, and encourages viewers to engage with their content on YouTube and Instagram for more insights.
Mindmap
Keywords
π‘Fibonacci
π‘Price Action
π‘Support and Resistance
π‘Trade Entry Opportunities
π‘Confluence
π‘Trend Trading
π‘Breakout Momentum
π‘Trade Quality
π‘Candlestick Patterns
π‘Multi-Time Frame Analysis
π‘Trend Change Confirmation Pattern
Highlights
Introduction to a trading strategy combining Fibonacci with price action, applicable across various asset classes.
Importance of Fibonacci levels as key support and resistance areas in trading.
Demonstration of how to use the Fibonacci retracement tool on trading charts.
Explanation of how traditional traders use Fibonacci levels to enter trades in uptrends and downtrends.
The psychological aspect of why Fibonacci levels are effective in trading due to herd mentality.
Fibonacci levels as areas of value within a moving trend, offering better entry points.
The problem with relying solely on Fibonacci levels for trade entries without considering other market factors.
Combining Fibonacci levels with key support and resistance levels to enhance trade quality.
Identification of high-quality Fibonacci levels: 50%, the area between 50% and 61.8%, and the 61.8% level.
The concept of trade quality and its significance in trading success.
List of high-quality trade traits that contribute to successful trade opportunities.
The necessity of a trend change confirmation pattern to align short-term and long-term trends.
Utilization of multi-time frames to identify trend changes and suitable trade entries.
A step-by-step breakdown of a high-quality trade opportunity using the discussed strategy.
The importance of higher time frames in providing accurate market direction and trade guidance.
A massive Bitcoin and crypto trade example demonstrating the application of the strategy.
Encouragement for viewers to engage with the content and follow the Instagram page for more insights.
Transcripts
[Music]
hey guys welcome back to another episode
in this video we will be showing you the
number one trading strategy that
combines fibonacci with price action
this will be the most important trading
video you will ever watch as we'll be
covering concepts you won't find
anywhere else online whether you trade
stocks options cryptos or currencies
this price action video is essential for
all traders of all asset classes we're
also going to go through the massive
bitcoin and crypto trade our members and
us gained on using this exact strategy
so that you can do it yourself
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exactly when we release new content
now here's a quick breakdown of what we
will be covering in this video
[Music]
so let's get right into it
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a topic we get asked to cover almost
daily is how to use fibonacci in trading
as you already know we always read the
comments to decide what topics to cover
next so right now go to the comments
section and tell us exactly what topic
you want us to cover next
when we say fibonacci we are referring
to the fibonacci tool and fibonacci
levels so why is the fibonacci tool and
fibonacci levels important to use and
understand
the fibonacci tool provides you with
trade entry opportunities at areas of
value during a moving trend as fibonacci
levels can act as a form of key support
and resistance and as you should know by
now support and resistance levels are
areas where price has a high chance of
reacting to or reversing from all which
again create high quality trade entry
opportunities for you
let's now access the fibonacci tool
to access the fibonacci retracement tool
click this button here on the left
scroll down
and click fib retracement right here
now to use it click on the chart
drag the tool upwards
and then click again
to lock it in
then to the right your fibonacci
retracement levels will appear
now these levels are important because
they are the most widely used fib levels
by traders and represent areas of value
within a moving trend
so let's go through how to apply the
fibonacci tool right on the charts
let's say you're analyzing this current
moving up trend
you have your run pull back run pull
back run
as you already know an uptrend makes
higher highs and higher lows
so if you are analyzing this run here
and want to apply the fib tool to find
areas of value to enter trays long at
here's how it works
you grab your fib tool click where the
swing low is at the bottom of the wick
drag the tool to the top of the moving
trend and where the swing high is you
will then see the fib level percentages
appear to the right
if price were to pull back to the 50
level this would represent a pullback of
50 percent from the recent swing high
here and if price were to pull back to
the 61.8 level this would represent a
pullback of 61.8 percent from the recent
swing high here
so let's show this in the opposite
direction and in a downtrend
you have your run pull back run pull
back run
as you already know a downtrend makes
lower highs and lower lows
so if you are analyzing this run here
and want to apply the fib tool to find
areas of value to enter trades short at
here's how it works you grab your fib
tool click where the swing high is at
the top of the wick drag the tool to the
bottom of the moving trend and where the
swing low is you will then see the fib
level percentages appear here to the
right
if price were to pull back to the 50
level this would represent a pullback of
50
from the recent swing low here
and if price were to pull back to the
61.8 percent level this would represent
a pullback of 61.8 percent from the
recent swing low here
now how do average traders traditionally
use fibonacci to enter trades
so in an uptrend when price pulls back
to these fib levels traders will enter
trades long when price hits these fib
retracement levels because fibonacci
levels act as a form of support in an
uptrend and again support levels are
areas where price can potentially bounce
and reverse from
going the other way in a downtrend when
price pulls back to these fib levels
traders will enter trades short when
price hits these fibonacci retracement
levels because fibonacci levels act as a
form of resistance in a downtrend and
again resistance levels are areas where
price can potentially bounce and reverse
from
now let's get into the psychology of
fibonacci and why fibonacci levels work
so the first reason fibonacci levels
work is because of herd mentality or
what can be deemed a self-fulfilling
prophecy a lot of traders subscribe to
these fib levels in order to identify
trade opportunities to be more specific
the school of fibonacci traders who look
to take action at fib levels adds
additional confluence to areas you are
already watching for trade opportunities
and we'll dive deeper into this in the
next section
and the second reason fibonacci levels
work is because fibonacci levels
actually represent areas of value during
a moving trend or more specifically
you're getting in at a better price
relative to where price has already been
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so how do we use fibonacci as part of
our trading
first let's go through the exact fib
levels we use and the quality of the
different fibonacci levels
first the 50
or 0.5 fib level
this is a great quality fib level as it
represents a deep pullback during a
moving trend
as a quick note even though we say level
you should treat it as an area like all
things second the area between 50 fib
and 61.8 fib
this is again a great quality fib area
as it represents a deep pullback during
a moving trend
and third the 61.8 percent or 0.618 fib
level
this is the best and highest quality fib
level because it represents a very deep
pullback and best area of value during a
moving trend
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now there is a problem that lies with
using fibonacci levels the traditional
way
when price pulls back to a fib level a
trader subscribes to using they will
enter a trade instantly once price hits
the fibonacci level as they expect price
to reverse
now the problem with using fib this way
is that you're assuming that price will
reverse solely because it is at a fib
level and not take into account the
multitude of other moving parts within a
noisy and imperfect market
fibonacci levels do indeed work as
support and resistance levels but
fibonacci levels on their own isn't
enough
so this then leads us back to the main
question we get asked which is
how do we use fibonacci as part of our
trading process where it actually helps
here is the exact formula we use
we combine fibonacci levels with key
levels of support and resistance or
areas of confluence two increase trade
quality now this is a stacked statement
so let's break it down starting with
combining fibonacci levels with
key levels of support and resistance to
increase trade quality
first let's quickly recap what key
levels of support and resistance is key
levels of support and resistance are
levels where price has reacted to
bounced from or reversed from in the
past
this matters because if price reacted to
these levels in the past there is a
chance that price will react to them
again in the future meaning possible
trade opportunities arise at these
levels
now back to the first way we use
fibonacci which is combining fibonacci
levels with key levels of support and
resistance to increase trade quality
so let's do this right on the charts but
from our perspective at every step
you had your key level of resistance
here so you would have had it drawn in
and extended out in case price reacted
to it again in the future
after price broke out this key
resistance level then becomes new
support which means if price approaches
this level there are possible trade
opportunities long
so how do we increase the trade quality
of this trade opportunity this is where
the fib tool comes into play
with the fib tool click at the swing low
here
drag it up to the recent swing high
and look at that the trade opportunity
you identified is also right at the 61.8
percent fib retracement level which is a
very high quality fib level as it
represents a very deep pullback within
the moving trend and a great area of
value to get in at
so the combination of a key support
level with a key fib level increases the
quality of the trade opportunity instead
of taking a trade with only a support
level
now as price approached this level of
support you had no idea whether there
would be a reaction to the level or not
you needed to wait for price action
through candlestick formations at the
area to show that prices indeed reacting
to the level this time around
so when price reached the level you had
exactly that which was a candle with a
long wick sticking out which shows a
reaction to the level and confirms the
trade opportunity long
so let's build on this and move on to
the next way we use fibonacci which is
combining fibonacci levels with areas of
confluence to increase trade quality
so first areas of confluence are areas
where multiple schools of traders are
stacked and looking to take action which
presents trade opportunities
these trade opportunities at these areas
of confluence where many schools of
traders are stacked have a higher
probability of going in your favor due
to many traders taking action at the
same time which creates momentum for the
trade
this here is where the short trade
opportunity occurred as it is an area of
confluence and access point so let's
break it down
first you would have identified this as
a clear moving downtrend as price is
making lower highs and lower lows so you
want to trade with the moving downtrend
you add your key level of resistance
here because of this reversal point
you have your trend line here and
because it crosses with the resistance
level it makes it an area of confluence
you then have your moving average here
notice how it intersects perfectly at
the access point and area of confluence
so to increase the quality of the trade
we grab the fib tool click at the swing
high here drag it down to the recent
swing low
and look at that the trade opportunity
you identified at the area of confluence
is also at the 50
fib retracement level
so when price reached the level you had
multiple longwood candles sticking out
and failing to break through which shows
a reaction to the area of confluence and
confirms the trade opportunity short so
why is this a high quality short trade
at this area of confluence
you had support and resistance traders
looking to enter short you had trend
line traders looking to enter short
moving average traders looking to enter
short trend traders looking to enter
short candlestick and price action
traders looking to enter short
confluence traders looking to enter
short and then also you had fibonacci
traders looking to enter short
all these schools of traders stacked at
the area of confluence looking to take
action and in this case take action and
enter short trades increases the chances
of the trade going in your favor which
means it is a high quality short trade
entry
before we get into the strategies
section there is one topic and
foundational trading ideology you must
learn first it is the concept of trade
quality without fully understanding
trade quality your trading journey ends
here and you will always be at a huge
disadvantage
this is the most important training
lesson you will ever learn
[Music]
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[Music]
all right let's get back into it
so what is trade quality exactly
any attributes and factors that
influence the chances of success of a
trade opportunity you have identified
meaning you shouldn't look at trading as
taking right or wrong trades but you
should look at trading as taking low
quality trades versus high quality
trades
so how do we increase the quality of a
trade
simple the more you learn and understand
about price action the more high quality
traits you can identify
the more high quality traits means the
higher the probability it will go in
your favor but more importantly go in
your favor with true momentum and
distance so that you can actually make a
good return on the trade
so here it is the most important part
we're now going to go through a list of
high quality traits the more you have
from this list within a trading
opportunity you have identified the
higher the trade quality every example
in this video will be coming back to
reference this list
first
trend trading
are you trading with the moving trend
in an uptrend you would want to look for
long trade entries to move with the flow
of the upwards market pressure
in a downtrend you want to look for
short trade entries to move with the
flow of the moving downwards market
pressure
next break breakout momentum
are you trading with heavy breakout
momentum
so what you do is you identify a key
level of support or resistance where
price tried multiple times to break
through and failed
then price finally broke through the
level showing the heavy bullish momentum
and heavy buying presence that entered
the market so from a price action
perspective for price to be able to
break such a key level that held
multiple times there needed to be heavy
momentum that entered the market so what
you want to do is trade with the heavy
bullish momentum and buying presents so
that you can ride the wave
next a fresh trend versus trend
exhaustion
are you getting into a trade at the
start of a reversal and a fresh trend
where price has legs and room to move
fresh trends and fresh reversals are
powerful because you can capture a
larger portion of the move as you are
getting in early and at the start
in contrast when you enter trades after
the trend has already moved
significantly the trend might suffer
from trend exhaustion and if enough
people start taking profit it can
trigger a larger reversal
next using the higher time frames
things you find on the higher time
frames hold more weight when we say
higher time frames we are referring to
the monthly and weekly time frame
specifically so what exactly is things
you find
it can be key levels price movement
price patterns or any form of price
action that is visible on the higher
time frames that influences your
directional bias
price action takes longer to form on the
higher time frames but as a result it
gives you a more accurate depiction of
where price is headed and of what the
market is actually
doing next
multi-time frame usage and time frame
confluence
do you have time frame confluence
meaning using multiple time frames that
give you the same directional bias we'll
cover this in an upcoming video
next divergence
remember in our previous video
divergences can be very effective
engaging possible reversals of price and
reversals of the trend so here is a
chart we showed you in our last video
showing the different qualities and
types of divergences we look for again
reference our last video on rsi where we
cover divergences in depth
next
fibonacci retracement levels
are you at a fib level and if so which
fib level
are you combining fibonacci levels with
key levels of support and resistance
with areas of confluence
next
trend lines
do you have a trend line that also lines
up with where your trade entry is
do you have a trendline break that
signals a trend change
next
moving averages
does the moving average line up
perfectly with your trade opportunity in
area of confluence
which moving average is it certain
moving averages work better for specific
time
frames next
areas of confluence
are you at an area of confluence
and if so how many traits are stacked at
the area of confluence the more that are
stacked together at the access point
means the higher the quality of the area
of confluence
next
candlestick patterns
do you have a candlestick pattern
forming and if so what kind
do you have multiple candlestick
patterns stacked together
is the candlestick pattern forming at a
key level
is there price action inside of the
candlestick on the lower time frame
next
chart patterns
do you have chart patterns forming do
you have patterns that show a trend
continuation do you have patterns that
show a trend reversal now chart patterns
is a very very in-depth topic that we'll
cover in a future video
now a final branch trait that is very
important
support and resistance quality traits
so not all levels of support and
resistance are the same meaning you need
to also gauge the quality of an sr level
the higher the quality of the support or
resistance level the higher the
probability that price will actually
react to the level of support or
resistance this is very key
now here are the key traits to look for
when gauging the quality of an sr level
first found on the higher time frames
sr levels found on the higher time
frames specifically the monthly and
weekly are the most key levels
found on means actually visible on the
higher time frames
second extreme swing highs or lows
meaning the highest and lowest points
prices reached in recent time
third
multiple reactions bounces or reversals
from the level
and fourth recently formed
meaning it was created very close to the
left of where price currently is
so to recap the more traits from this
list stacked together on a trade
opportunity you are looking at makes it
a very high quality trade
there are still a lot of other trade
quality traits and concepts we haven't
discussed yet which we will introduce in
future videos
so now that you understand the premise
of trait quality and fibonacci let's
combine this all together and move into
the strategies section
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[Music]
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now there are multiple parts to the
strategy but the core of it is a trend
trading strategy
so we're going to start simple with
combining fibonacci with key levels of
support and resistance using only one
time frame
now every example we go through we will
do it through the process of identifying
and listing high quality traits
this here is where the trade qualities
list and counter will appear
this here is where the trade opportunity
presented itself so let's go to the high
quality trades that this trade
opportunity had
this is the one hour time frame
now the first high quality trade you had
was a key level so you had it drawn in
and extend it out
now what quality traits does this key
level have
multiple reactions through these three
reversals and recently formed because
the level was created close by directly
to the left
the second high quality trait you had
was heavy bullish momentum so this key
resistance level previously held three
times before price finally broke through
it showing the heavy bullish momentum
and buying presents which is required
for price to be able to break through
such a key level
this then means you want to trade with
this heavy bullish momentum and heavy
buying presence
and this is where the trade opportunity
long presented itself
with the fib tool click at the swing low
here
drag it up to the recent swing high
and notice how the key level is also
right at the 61.8 percent fib
retracement level which is a very high
quality fib level
these candles with the wicks sticking
out right at the level shows a reaction
to the level which then confirms the
trade opportunity long
all these traits listed make this a high
quality long trade opportunity
so this was just starting simple let's
now take it up a notch and move into
combining fibonacci with areas of
confluence
in this example we're going to go even
deeper and explain what should have been
going through your mind at every step of
the trade
this here is where the trade opportunity
long presented itself so let's break it
down
you first identified that this was a
clear uptrend through the higher highs
and higher lows so you want to trade
with the moving uptrend
this is a high quality trade
next you should have identified your key
level of resistance turned to support
this is a very high quality level
because price reacted to it multiple
times and was recently formed
another high quality trait
you then would have identified that you
had heavy bullish momentum because price
broke through this very key level of
resistance that previously held multiple
times
and again for price to break such a key
level you needed heavy bullish momentum
and buying presence
and knowing this you want to trade with
this bullish momentum
another high quality trait
as price started pulling back you would
have identified your possible trade
opportunity long at the key level of
support
next you had your moving average that
crossed perfectly with the key level and
trade opportunity
another high quality trait
next you would have identified that a
trend line crossed perfectly with your
key level and moving average
another high quality trade
then you would have checked to see if
you were at a fib level as well
click at the swing low drag it up to the
recent swing high
and perfect the 50 fib retracement level
also lines up right at the area
another high quality trade
now the fact that the key level trend
line moving average and 50
fib level all intersected perfectly
makes this an area of confluence
or an area where multiple schools of
traders cross and are looking to take
action
another high quality trade
now look at all the high quality traits
that are stacked in this trade
opportunity
these are very high quality trades which
means they have a very high chance of
success
so this part is very important even
after all the high quality traits we
have identified as price pulled back and
approached this area you had no idea
whether there would be a reaction to the
area or not you needed to wait for price
action through candlesticks forming at
the area of confluence to show that
price and the market is indeed reacting
to the area of confluence this time
around
and that is exactly what you got
you had these candles with the wicks
sticking out right at the area of
confluence which shows a reaction to the
area
now even after you had candlesticks form
and react to the area of confluence you
don't instantly enter a trade long you
need the final two steps which is
one the trend change confirmation
pattern and two our key entry and exit
strategy and entry tool
we'll cover this as we progress through
the video
so let's show this again
so this is the weibo stock
many of our members took this exact
trade because of how picture-perfect it
was
this year is where the trade opportunity
long occurred so let's break it down
first we identified that this was a
clear moving uptrend as price was making
higher highs and higher lows so you want
to trade with the moving trend this was
your first high quality trade
you then had your key level of
resistance turned to support another
high quality trade
you then had your trend line that
crossed perfectly with the key level
another high quality trade
you then had your moving average that
also crossed with the key level and the
trend line
another high quality trade
with the fib tool you click at the
recent swing low here drag it to the
recent swing high
and notice how the 61.8 percent fib
level also lines up with your trade
opportunity another high quality trade
now the trend line key level moving
average and fib level all lining up
perfectly gives you an area of
confluence
as price pulled back to the level you
had a ton of candles that tried over and
over and over again to push lower but
failed this all shows a clear reaction
to the area of confluence
you then need the final two steps again
so let's do this one more time
this is the air canada stock trade our
members took the entry occurred right
here so let's break it down
first you identified the uptrend so you
want to trade with the trend
next you identify the key level here
the moving average then lined up with
your key level and is where the trade
opportunity presented itself
the trend line also perfectly crosses
with your key level and moving average
with the fib tool click at the swing low
here drag it to the recent swing high
the 61.8 percent fib area lines up
perfectly
this thing gave you an area of
confluence making this a high quality
long trade opportunity
as price pulled back to the area you add
a perfect along with candle right at the
area of confluence which shows a
reaction to the level
now this leads us perfectly into our
next topic so after you had the
candlestick react to your area of
confluence you don't enter a trade long
instantly and blindly you need the trend
change confirmation pattern so let's get
right into it
now before we continue if you're
enjoying this video and want us to
release more videos more often please
hit the thumbs up button
and in the comments below tell us what
videos you want us to cover next and any
questions you have
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is where the trade opportunity long
occurred
you first identified a clear uptrend so
you want to trade with the trend
next you had your key level of
resistance turned to support
next you had heavy bullish momentum
because price broke the key level that
previously held multiple times
then the moving average crossed with
your key level and where the trade
opportunity long presented itself
with the fib tool
swing low to swing high
and you have the 50 to 61.8 percent fib
zone that lines up with your trade
opportunity area
this then gave you an area of confluence
when price pulled back to this area you
had a long wick candle right at the
level which shows a reaction to the area
of confluence
at this point you still don't jump into
a long trade instantly this then leads
us to the next step required which is
the trend change confirmation pattern
now why exactly do you need a trend
change confirmation pattern what we are
going to explain right now is very
important to understand
your big picture trend is indeed an
uptrend and bullish
but your immediate trend is a downtrend
and bearish
meaning there is a conflict in your
directional bias
or to be more specific
the larger trend is telling you to trade
long while the short-term trend is
telling you to trade short the two
trends are telling you to trade in two
different directions
so what can happen is price can stall at
your area of confluence
react to it and then break through and
continue down and trigger a larger trend
change this happens when not enough
buyers step in at the area of confluence
don't forget that this here is a current
moving downtrend which can continue on
in its directional path
so how do we get around this problem
you need this short-term downtrend to
turn from bearish to bullish so that
this short-term trend matches the
direction of the big picture trend
now to do this you need to look for a
trend change pattern inside of this
downtrend that shows a change from a
downtrend to an uptrend or from bearish
to bullish or to be more specific to
signal that the short-term downtrend is
over and that the larger uptrend can
continue or to be even more specific to
confirm that enough buyers actually
stepped in at the area of confluence now
there are many trend change confirmation
patterns we use but to keep it simple
for now what you do is you place a trend
line onto the immediate trend like this
and if you have a trendline break
this signals a trend change from a
downtrend to an uptrend a change from
bearish to bullish and shows that the
short term downtrend is over and that
the larger uptrend can continue
if price doesn't break the trend line
and continues down there's no trade
because not enough buyers stepped in at
the area and it's clear the sellers are
in control
so after you had that trend change
confirmation breakout all things are a
go this is when you need the final step
of the formula which is to go to the
lower intraday time frames and use our
key entry and exit strategy and entry
tool
so this leads us to our next topic what
if you cannot place a trendline onto the
immediate trend
this is why you need to know how to use
multi time frames knowing how to use
multi-time frames is what separates the
amateurs from the pros
so before we continue
every day we get asked the same two
questions
how do we design and edit our youtube
videos
how did we grow our youtube channel so
fast
if you want to learn how to do this all
yourself step by step head on over to
our website at wisetrade.com
the link is also in the description
below
so let's start from the top again except
now we'll be combining the usage of
multi-time frames this is the eight hour
time frame and this is where the trade
opportunity long occurred
first you identified the key level here
next you had heavy bullish momentum
because price broke the key level that
previously held multiple times
then the moving average crossed which is
where the trade opportunity long
presented itself
with the fib tool swing low to swing
high
and the fib zone lines up
this then gave you your area of
confluence
when price pulled back to the area you
had a long wick candle with the wick
sticking out showing a reaction to the
area of confluence
so in the last section what we would do
is we would put a trend line onto the
immediate trend and wait for a break to
occur before looking for a trade entry
long now the issue with doing this on
the current trend is that price movement
is too tight meaning you cannot clearly
see the swings of price and cannot see
the swing highs and swing lows so if you
attempted to place a trendline up close
and tight to the trend like this you
will often be faked out by false
breakouts this is a very important point
price movement won't always be suitable
for you to place a trendline hence why
you need to know all the trend change
patterns which we will cover in a future
video but now for this particular case
how do we get around this problem of not
being able to place a trendline and
here's what you need to do we need to
use a lower time frame where we can look
inside of this downtrend and be able to
see the swings and price movement of
this trend and then be able to look for
price action that shows a trend change
from a downtrend to an uptrend to
confirm that the downtrend is over and
that the larger uptrend can continue so
let's pull up the lower time frame
specifically the four hour time frame
and put it beside this one
so the chart on the left is the eight
hour time frame we just looked at
meaning every candlestick represents
eight hours of time the chart on the
right is the same asset but is the one
hour time frame meaning every
candlestick represents one hour of time
here's the key level on the eight hour
time frame and here is the same key
level on the one hour
here's the eight hour pullback downtrend
where we tried to place the trend line
but couldn't and here is the same
pullback downtrend on the one hour time
frame here is the area of confluence we
previously identified and where the long
trade opportunity occurred and here is
the same area on the one hour time frame
now on the eight hour time frame we
previously looked at notice how you
couldn't see the swings of price whereas
on the one hour time frame you can
clearly see the swing highs and swing
lows and movements of price
again we are looking on the one hour
time frame in this downtrend for price
action that signals a trend change from
a downtrend to an uptrend and here it is
on the one hour time frame we can easily
place a trendline connecting these swing
highs because again on this time frame
we can actually see the swing highs and
swing lows
and once you had the trend line break
this was your trend change confirmation
the one hour time frame turned from
bearish to bullish and matches the eight
hour time frame big picture bullish
directional bias
so one more point as to why a trend
change confirmation pattern and using
multi-time frames is important
you could have easily had a long wick
candle form and stall at the area of
confluence on the eight hour time frame
here but then on the lower time frame
price could have done this instead
run
pull back run
pull back and instead of breaking out
and through the trend line started
another run and continued on triggering
a larger trend change so after you have
your trend change confirmation breakout
this is when you need the final step of
the formula which is to go to the lower
intraday time frames and use our key
entry and exit strategy and entry tool
so now the part you've all been waiting
for the massive bitcoin and crypto trade
our members and us took using this exact
strategy
[Music]
so
[Music]
this trade used everything we have shown
you in this video and also some more
advanced concepts
so let's break this down step by step
this is the bitcoin monthly time frame
meaning every candlestick represents one
month of time as we previously discussed
things you find on the higher time
frames such as the monthly and weekly
hold more weight
this is a very very key point because
the monthly is slower moving and things
take longer to form as a result it gives
you a very accurate depiction of where
the market is headed and of what the
market is actually doing
now you don't trade on the monthly
timeframe you only use it as guidance
for trade entries you take on the lower
time frames
[Music]
so there were three high quality traits
that gave us our clear bullish
directional bias even before we brought
in other time frames
first your key monthly resistance level
turn to support
price then broke through this very key
monthly resistance level that held two
times
next price was in a clear downtrend
before price made a higher high which
shows a clear trend change pattern and a
clear moving
uptrend even before we go down in time
frames everything we just covered tells
you one simple thing look for long
trades
now this is a very important point this
is what price action is in a nutshell we
were reacting to what we saw the market
doing not guessing where the market
would go next
this wasn't even on our radar until we
saw the breakout momentum and heavy
bullish presence that entered the market
which is then when it entered our watch
list
as retail traders you don't have the
power to move the market you are just
reacting to what you see and entering
trades in the direction of where the
herd and crowd is headed that's it
so let's pull up the weekly time frame
so that we can see this in more detail
so the chart on the left is the bitcoin
monthly time frame we just looked at and
the chart on the right is the bitcoin
weekly time frame meaning each
candlestick represents one week of time
this was the monthly key level and this
is the same key level but on the weekly
timeframe here was where the breakout
occurred on the monthly
here is the same breakout area on the
weekly so let's go through the high
quality traits on the weekly time frame
full screen
this is where the trade opportunity long
occurred which was at the key monthly
level and now also the key weekly level
again things you find on the higher time
frames hold more weight
so first you add your very key weekly
level
next this level that held three times
previously finally broke through which
shows how much bullish momentum and
buying presence had entered the market
next we are also in a clear moving
uptrend through the higher highs and
higher lows
we then had the moving average that
crossed perfectly with the key level and
is where the trade opportunity long
presented itself
next with the fib tool click at the
swing low drag it to the swing high
and notice how the 61.8
fib area also lines up with our trade
opportunity
this then gave you your area of
confluence
remember that this is a level that is
visible
on the monthly and weekly meaning there
is a very high chance that price will
react to the level when price finally
hit the area of confluence you had
candles with the wicks sticking out
right at the level which shows a
reaction to the area of confluence
so as we previously discussed we would
usually try to place a trend line onto
the immediate trend and wait for a break
to confirm the trend change now the
issue with trying to put a trendline on
this current trend is that price
movement is too tight and we cannot
clearly see the swing highs and lows so
if we were to put a trend line up close
and tight like this it'll result in fake
and false breakouts so again to get
around this problem
we need to use a lower time frame to
look inside of this pullback where we
can actually see the swing highs and
lows of price and then be able to look
for price action that shows a trend
change from a downtrend to an uptrend so
let's pull up the daily time frame and
put it beside this one
the chart on the left is the bitcoin
weekly time frame we just looked at
and the chart on the right is the
bitcoin daily time frame here is the
very key monthly and weekly level and
here is the same key level on the daily
here is the pullback area on the weekly
here's the same pullback area on the
daily
here is the weekly time frame area of
confluence here's the same area of
confluence on the daily
now on the weekly time frame notice that
you couldn't see the swings of price
whereas on the daily time frame you can
clearly see the swing highs and lows and
movements of price
so again we are looking for price action
that signals a trend change from a
downtrend to an uptrend and we got this
trend change pattern in two forms
the first is the trendline break
on the daily time frame we can easily
place a trend line onto the immediate
trend like this and then once you had
that trend line break this was your
first trend change confirmation
now secondly you also had a higher high
which is another trend change pattern
run
pull back run
pull back run
but notice how this run here failed to
make a lower low but instead made a same
low or a double bottom which shows a
loss of momentum and this all occurred
at the weekly and monthly level
clear lower highs before price finally
broke through the trend line they made a
higher high which is again another trend
change pattern
so after you had your trend change
confirmation breakout all things are a
go this is again when you need the final
step of the formula which is to go to
the lower intraday time frames and use
our key entry and exit strategy and
entry tool
this was a very high quality a plus
trade almost picture perfect
now there were many different ways our
members entered on this trade some
directly through bitcoin as we showed
and some through positively correlated
assets
so now what exactly is the entry and
exit strategy and entry tool
meaning exactly where to enter trades
exactly where to exit
exactly where to put your stop loss
exactly where to put your profit target
how to manage an open winning position
to maximize profits and minimize risk
and all the other high quality traits to
look for within a trade opportunity
and a ton of other content that won't be
available on our channel as it is too
dense if you want to learn this all head
on over to our website at wisetrade.com
so in the comments right now tell us
exactly what topics you want us to cover
next and any questions you have again if
you want us to continue to release more
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hit the like button
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now
we also have a great selection of
trading art that shows you the exact
chart patterns and candlestick patterns
we use
if you want access to these pieces also
head on over to our website so thanks
for watching and i'll see you in the
next episode
[Music]
you
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