This week my past notes on @Moneytaur_ will be focusing on fibs. - FIBONACCI RETRACEMENT - - Introduction & Basics Fibonacci levels are derived from the Fibonacci sequence, which is widely found in nature. The levels used in trading are: 0.236, 0.382, 0.5, 0.618, 0.705, 0.786, 0.886 Technically, 0.5 is not a Fibonacci number, but in practice, it’s one of the most powerful levels. In trading, fibs define Premium & Discount of a range and help gauge possible targets within range, or beyond, using extensions and negative fibs. “ALWAYS start your analysis from HTF’s. Find the range, high and low. Set Fibs from Range high to Range low. Above 0.5 = Premium. Below 0.5 = Discount. Find Key-levels. Bottom of range low: Find longs. Top of range high: Find shorts. Trade on that range. Not ‘to the mooon!’” ------- - Fibonacci in Practice We always draw fibs from SL to SH or vice versa. • SL to SH will give us “support” levels we can look for long entries from. • SH to SL will give us “resistance” levels we can look for short entries from. (see charts in comments) - What we look for Based on the rules of supply and demand we look for longs in discount and shorts in premium of the range. This is why we only use the fib levels that correspond to equilibrium and P&D. These levels are 0.5, 0.618, 0.705, 0.786, 0.886. We are only interested in untouched levels from previous swings. Once touched the level is no longer actionable. - Wicks can lie When wicks hold next to no liquidity and can be considered a scam or flash wicks, we should not use them for drawing fibs from. A good example of this is MT’s INJ trade. xitter.cf/Moneytaur_/status/1846… - Timeframes & Swings Timeframes and ranges are key when drawing fibs. The higher the TF and the larger the swing, the more significant the untouched fib level becomes. Within a larger swing, internal structure forms, creating smaller swings with their own fib levels. 🔺Remember, we trade the range, but fib levels from higher TF swings can still align within the current range. Always zoom out to spot these confluences. - Resetting after the 0.5 When drawing fibs it is good practice to reset the fib after PA closed beyond the 0.5, using the newly printed SL or SH to draw the next fib from. (See chart in comments) - The Hierarchy of Fibs The higher the TF of the swing the more significant the fib level becomes. But the levels themselves are also significant. 0.236, 0.382, 0.5, 0.618, 0.705, 0.786, 0.886 - Sub Optimal The numbers 0.236 and 0.382 are fibs that MT uses less often. This is because they are not in premium or discount. They can however still be used to gauge the strength or weakness of a move. A bullish move that finds continuation at the 0.236 shows more strength than one which reverses at the 0.786 and can give us insight as to how strong the current program is. - Optimal The levels 0.5, 0.618, 0.705 are the fib levels that we pay the closest attention to. These are the fibs that consistently show the best reactions. - Semi Optimal The levels 0.786 and 0.886, if reached, can signal the move is potentially showing signs of weakness. Sudden wicks to these levels can be fine, but slow price action grinding its way to this level can be a red flag. - The 0.705 The 0.705 is significant because it marks the middle of the OTE, Optimal Trade Entry. MT states this is also what algos are programmed with. “0.705 is what trading bots are programmed with.” - The 0.5 As mentioned before, 0.5 is not a number found in the Fibonacci sequence. It does however mark the midpoint of any move, OB or FVG, and thus is extremely powerful. You can look at it like the line in the sand, a declaration of intent. Moving past the 0.5 signals continuation is likely. (See charts in comments) The 0.5 is also a key level used by algos. “I have seen you using 0.5 of OB or FVG as a support.” “Just how algos work. Backtest on it or gain experience and you might notice it.” xitter.cf/Moneytaur_/status/1841… ------- - Fibs, an Integral Part of MT’s Trading System - The power of confluence The most powerful use of fibs in MT’s trading style is in confluence with key liquidity levels. Finding key levels that line up with fibs adds confidence in our level. When we find “pocket fibs” lining up with refined levels, confidence grows stronger. The higher the TF of the fib level the stronger our conviction. If we find an optimal level as outlined in order blocks, and this aligns with an HTF untested fib, we have a strong plus one on an already key level. - Seeing is believing This example from Moneytaur is based purely on untested fib levels. Even without the support of liquidity levels you can see the power of Fibonacci. When paired with untouched, hidden liquidity, we have a powerful recipe to base our trades off, as highlighted in this SUI chart from MT. xitter.cf/Moneytaur_/status/1749… ------- - Negative Fibs & Extensions - Projected Levels Fibonacci levels can also be used with extensions (eg: 1.5) or negative numbers (eg −0.5). These can act as predictive levels. MT uses these as another tool in his arsenal to gauge where PA will likely head to and once reached how to adjust his risk. An example is this BTC chart, where he references his “best case scenario.” xitter.cf/Moneytaur_/status/1869… “If breaking above, I’ll be trailing all bullish positions.” The BCS level was likely found with extensions or negative fibs, combined with his market knowledge and experience. If this level would be exceeded, it would prompt him to trail, adjusting his risk based on projected levels. - Negative Fib Trades There are even examples of MT taking trades purely off negative fibs. One using negative fibs is this FET setup. This trade was not based on prior PA, purely negative fibs and his read of PA on micro TFs once the level was reached. xitter.cf/Moneytaur_/status/1775… Another example is this Popcat trade. xitter.cf/Moneytaur_/status/1843… This highlights not only his elite trading ability, but also his confidence in negative fibs. Maybe it has something to do with the quote below. “Algo’s are programmed with fibs, and negative fibs as well. It’s a must tool and it’s not a lagging indicator.” xitter.cf/Moneytaur_/status/1611… ------- - Using Fibs for Entries Fibs provide precise entry points, unlike broader OB zones. Targeting key fib levels within a refined zone can significantly improve RR. MT often enters on MO, based on micro timeframe reactions. Combining fibs with techniques like VSA can refine entry accuracy. Knowing what reaction you are looking for, paired with a precise spot where you expect the reaction, can offer greater clarity. “I enter at fibs and 👁️ reaction on micro TFs. I take 0.2 or 0.3% size on such plays. If it’s a good hit into aggressive drop I can add 1 or even 2% to my account from this trade alone, which here I’ve guaranteed already at least +0.5%.” xitter.cf/Moneytaur_/status/1843… ------- - Stop Loss and Take Profit Strategy Using Fibs - Stop Loss When a fib level falls just below or above our marked area we can use this as a potential stop for our trade. Even better if these levels align with other stop levels like the end of an FVG or an OB. The 0.5 is sometimes also the spot where MT chooses to move his stop loss to break even, SL2BE. - Take Profit It is often the case that MT will take profit at the midpoint of a swing. Using the 0.5 as a TP level is especially useful when no other liquidity levels are near. Crossing the EQ of the swing signals intent from market makers. It is best to take some profit off the table before this decision is made. In other instances MT chooses to trail his stop loss above or below the 0.5 once it has been passed. 🔺Often fibs will be front run by a hair. When placing entries or TPs it is good practice to front run these levels. - Take Profit in Price Discovery We can use negative fibs or extensions to mark areas to take profit when an asset is in price discovery. "If an asset is in price discovery what’s the best way to identify key levels to sell at?" “Apart from negative fibs I just trail my positions along with ‘price discovery’.” xitter.cf/Moneytaur_/status/1791… ------- - Algos & Fibs Algos are predictive and target key liquidity. Any lagging indicator is useless to an algorithm. Market makers seek liquidity. Supply and demand levels and OBs offer this liquidity. Fibs add confluence and are respected by bots. “it’s as simple as this: HIDDEN LIQUIDITY, and fibs do matter because billion dollar trading bots are programmed with them, and respect them. Most of what whales need to focus on is in ⛽️💡 retail investors while extracting profits 24/7.” ------- - Using Fibs to Predict PA In this post about picking coins that could recover after the next bear market, MT says the following. xitter.cf/Moneytaur_/status/1900… “Coins leaving HTF BBs behind, toward supply zones, above 0.5 fib of macro range. These coins are likely to recover, it’s just how the game is programmed.” This underscores the significance of the 0.5 level, especially when aligned with key liquidity zones and the intent revealed when these levels are crossed. A valuable reminder for when the next bear market lows emerge.