when looking at a blank stock chart it
can be really hard to pick a direction
so in this video I'm going to show you
how to create a road map using Fibonacci
retracements so you can clearly read a
stock chart and predict where it's gonna
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today we're gonna over how to use
Fibonacci retracements so when looking
at a blank stock chart and for our
example an upwards trending market how
do you know where these bottoms in the
upwards trend are gonna be and how do
you buy into those and accurately
predict where those bombs are gonna be
so you can capture these large moves
that the market has after it has these
bottoms so the easiest way to do this is
using Fibonacci retracements now
Fibonacci retracements are essentially
ratios of how much a swing is retraced
so what I mean by that is if you have a
stock and it goes from 0 to 100 in a
move the 50% retracement level would be
$50 so it would have gone from 0 to 100
and to retrace 50% of that move it would
have to trade all the way back down to
$50 a share and that would be the 50%
retracement level and there's a lot of
different or tracing levels that you can
find from the Fibonacci sequence if
you're looking for more than I mentioned
in this video feel free to look those up
online so if you're using thinkorswim to
get the Fibonacci tool it's just gonna
be in drawings and then in the drawing
tools it's going to be the percentage
sign now there are two ways to use
Fibonacci you can either use it to get
support levels or resistance levels to
get support levels you always use the
drawing tool from low point first to the
high point and then that will give you
potential support
to buy the stock and then if you want to
get resistance levels it's going to
always be from the high point to the low
point and that will give you resistance
levels to in an uptrend for here maybe
look to see where the trend is gonna
potentially fail because Fibonacci works
in any timeframe you need to figure out
a time frame you want to use you can use
Fibonacci's on a 5-minute chart or a
monthly chart when you're using
Fibonacci you want to get good at
identifying potential swings that you
want to use the tool awesome Fibonacci
works on any time frame so if you just
zoom in or zoom out of a chart you will
find different swings in the market that
will look like potential swings to use
Fibonacci off of but if you used every
swing that you saw in every time frame
you probably couldn't see the stock
chart because there would be so many
lines and Fibonacci retracements on it
so for a chart like this on a daily
chart you want to make sure you're
taking more of the daily swings so what
I mean by that is you can see that in
this move right here the stock still
goes through swings it goes through a
swing right here and then swings back up
multiple times as it's in this trend and
so for me trading on this chart I would
say that this is one swing because I'm
on a daily chart but if you're in a
smaller time frame chart a 15 or a
30-minute chart there could be five or
six swings in there that you might use
Fibonacci on now Fibonacci works on any
time frame and it also works in any
market you don't have to be using this
for the stock market you can use it on
cryptocurrency the Forex you can use it
on any market you want and that's to
really the awesome part of Fibonacci is
once you really learn how to use it it
doesn't matter what you trade so now
let's go into analyzing this uptrend and
I'm gonna show you how using Fibonacci
you could have potentially bought all of
these people
now with idea that the uptrend was only
established here because the higher
highs and higher lows mentality is
really only confirmed with this area
let's start with saying that the market
is trading right here and we're gonna
look for the potential next pullback to
buy so we're gonna take from this low to
high and make our fibonacci support
levels from that drawing tool I'm just
going to zoom in here so we can read it
a little better now with these Fibonacci
levels you never want to just blindly
buy it them again you always want to
have other reasons to get into the
market because you don't know which
level it's gonna hold that I would say
that this six one eight and the 50 are
generally stronger out of the four
levels that I have here but as you can
see here this market bounced off of the
three eight level before making that
next leg higher so if you were waiting
for the market to pull back all the way
to this six one eight level you would
have just missed out on this move so a
lot of people will use some kind of
oversold indicator or some kind of
indicator that shows them that the
market is gonna potentially bounce there
now it doesn't matter what you use but
you just want to find something that
works now another way and another really
way to confirm that there is a potential
support I like to use just support
levels based off of just stock patterns
so what I mean by that is stock charts
just show you resistance and support
levels based on highs and lows so this
high right here shows you a resistance
level you can draw a resistance level
line here and then this level down here
makes a support level and so every one
of these Peaks here and lows shows a
support or resistance level and as well
anytime a stock consolidates in an area
or trades in an area for a significant
amount of time that is also a level of
interest
so the idea is finding these Fibonacci
levels and lining them up with potential
levels of resistance and make you a
stronger support zone to look to buy
into the market so with this 3/8
two-level looking to the left of the
chart we can see that because this area
of interest right here had a peak and
now it was resistance but because the
market blew through it usually when the
market goes through a resistance level
it now becomes a support level or if a
market goes through a support level it
becomes a resistance level so with this
level I'm going to just gonna draw a
line here showing that support area and
then as well with this area down here
I'm gonna draw one from there so it kind
of makes this Zone in here that we're
looking for from that area and you can
see that it lines up with the 50 and the
382 and so I would say we would want to
look for support in that area from both
of these but again these are just levels
and you're gonna want to have
potentially a oversold indicator to buy
into the market but once you see this
market bottom here you can buy into this
and potentially ride out this whole move
as the marker verses back to making new
highs moving on to the next swing if we
once we were able to close out of that
trade for a profit we can come to this
next swing here and analyze it from this
low to this high you can see initially
this one actually tapped that 50%
retracement level quickly but again it
sold off all the way down to actually
this 76 level down here that we can see
unlike the last one that we would have
bought this one struggled in this area
for a long time now you can see that
chops around this area for a while and
tapped this 7 8 6 level a lot and holds
this general zoning
here pretty strong for a few days now a
good way to potentially look and see for
those stronger zones is again looking to
the left side of the chart because the
stock traded in this zone here for quite
a while this whole area is going to be
strong support or the stock and as you
can see the stock broke out of here and
then came in and it actually tapped
basically the top of that rebounded and
then eventually actually broke through
that top area but bounced off and kind
of not exactly to the exact tick but
again it's more about holding that zone
it held this zone before it began to
make that new high and again buying this
you want to either have some other
confirmation of either the market making
a new trend on a lower timeframe chart
so if you see that on this time frame
that the market is in a downtrend you
can go into maybe a 40 or our minute
chart and see that the market switches
from a downtrend of making lower lows
and lower highs to making higher highs
and higher lows and that's when you
would buy so you really to get a good
confirmation you probably only would
have got in right here
but again looking at where this stock
went after this move who really cares
that you didn't buy the bottom you still
bought really close to the bottom and
captured a really strong move now for
this next swing again taking that low to
high we can see that
the market bounced off this to create
two level but again we don't know that
right but using that looking left for
that strong area of support this high
right here is going to be a strong area
of support and three four hand we can
see the market bottoms off of that zone
quite a few times and then coming into
this area it actually ended up hitting
this to be a two level and this zone
kind of at the same time and again with
an oversold indicator you would have
been able to potentially buy this bottom
and catch this little upswing again it
wasn't as big as this guy right here but
you're not always gonna get those huge
moves that these swings have sometimes
if the overall trend is starting to have
trouble and may be starting to fade the
move might get smaller and smaller as
the market maybe starts top out and
consolidate now moving off to the next
area we can see that once the market
kind of made this swing we could have
done another smaller swing here with
again the market kind of bottoming out
in this area over here which again was
that kind of strong support area you can
see that the market you know starts to
consolidate and hits this area multiple
times making that a strong area of
interest and then with it lining up with
this seven eight six level making that a
much more interesting level of support
now you don't have to necessarily bought
this exactly down there you could see
that you market rebounded off that
Verrill really strongly and then the
next day you could have seen that well
the market came up to this six one eight
level and you could have bought it there
with the idea that the market is making
any lower low and that this is a strong
level of support to potentially buy from
and just make a strong educated guess
that the markets gonna bottom here and
go up another way you could have
potentially bought this if you missed
this bottom is just seeing this overall
pattern that these stock did it came
down here and held this support and
rebounded and you can see that it's
coming into this level of resistance
right here and you can see it but it's
head against this level for three days
in a row eventually breaking through
that level and that can be a strong way
to buy into a stock as well is it's this
is a really strong breakout pattern now
moving on to the next area is once you
would have been done with this area of
trade and looking for the next pullback
again we take this low to high and look
for those areas of interest now again
this 50 and 3/8 zone looks pretty good
because we can see that you know again
it had this strong area down here to
potentially bottom so this market
actually bonded maybe a bit sooner than
I would have spected but again you can
see that it held that level and tapped
it multiple times and started to make
higher highs and higher lows allowing
you to potentially get in at still a
decent price and catch this next move
that the market is potentially having
now with the market being right here
right now you can look for resistance
levels with this move on the way up
using those retracement levels just to
actually zoom in on a smaller time frame
that we can see this a little better
you can see that the market bounced off
of here made a higher high and so this
is how you really want to buy these from
here this high the market starts from an
uptrend the market starts into a
downtrend so it makes a lower low a
lower high and then from there you can
see it just cascades down with lower
lows and lower highs making this
downtrend channel and you can see once
it breaks that channel at those fit
support levels that we saw and that
support zone that we want to potentially
buy we can see that it makes this new
high it broke this high right here
making a new high and so it made a new
high and then made a higher low at that
zone that we still were interested in so
we're gonna want to buy at that low and
then once we buy it at that potential
low we will just wait for the market to
start to move higher and with these fib
levels we have drawn now as resistance
levels we can look area for areas that
the market is gonna struggle with so the
market bounced all the way through this
three eight two level but you can see
that it strode at this fifty retracement
level quite a lot and actually found
strong support at this three eight two
level and as you can see right now it
blasted all the way to this seven eight
six level and then broke up through that
the next day to the hundred level and
has now come back down and bounced off
this seven eight six level and looks
like it might start to trend higher
so this is actually a really awesome
chart of how you can see the market kind
of rebounding through these fib levels
and this is really how I like to buy off
of these support levels that we find is
seeing that downtrend change and then
looking for that pullback into that zone
again to buy once that trend has changed
you really want to wait for that
confirmation that the trend has changed
otherwise you could be buying into a
Down trending market and you never want
to do that because you don't know when
the bottom of the market is really gonna
be it could just keep going down and you
could just lose your money that way many
times over you always want to wait for
something to tell you that yes this is
the bottom and it's worth it to put my
money on the line to buy into this stock
and with this example this area I would
say is a perfect area to buy it
of course hindsight that looks great
right but again we looked at that zone
that zone was in this area that
potential support zone and it made that
higher high here and then this being a
lower low so maybe you don't get in
exactly at the bottom but again you
could have got in as this started to go
higher or you could have got in here as
it really did a strong confirmation of
that higher high and lower low area so
once you're in these trades and it
breaks above these Fibonacci levels that
we have and into this kind of white
space what do you do and where do you
know that the resistance levels are well
those are called Fibonacci extensions
and I will have a video out on those
right here now if you like this video
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