candlestick patterns around fibonacci levels

8/6/2019 Candlestick Patterns Around Fibonacci Levels

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FRIENDS OF THE

TRADERThe herd mentality

Algorithmic trading

Common indicators

Habitual behavior

Fear and greed


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ANTICIPATE WHATS ON THE HORIZON

Dont get caught in the past actively engage into

the future

Dont be afraid of acting on best estimations

Use the sniper scope approach, not the shotgunsplatter

Nothing beats superior preparation

Prepare for worst case scenarios


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J ust a littlereminder


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A simple Fibonacci retracementWhere do we expect this chart to

go?Evidence that suggests direction?

Relative supportMoving average breakdownNegative trending chart


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See the newcandlestick?What does this tell us?

SUPPORT AND RESISTANCE LEVELSARE MUCH MORE IMPORTANT

THAN MOVING AVERAGES OR ANY OTHER LAGGING TECHNICAL INDICATORS


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Do we see a swing decision point on the horizon?What should we see as decision points?

Where might we put a stop?


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Can we see new levels as we become more granular ?


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Reasons to go long:

Price holding supportBollinger band formations signal reversal

Confirmation candles printing above the 8ema and 20 smaMoving average inflection :


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DECISIONS MEAN THAT WE MUST IGNORE SOME INDICATORS IN THE FACE OF OTHERS

Because we know the power of the golden ratio we cannot decide without anelement of coin tossTherefore, we should let the chart resolve, or if entering in a certain direction

enter small


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What is happening to our generaldowntrend at this level of

granularity?

The picture of resolution appearsmore quickly

Is there anything else we shouldbe waiting for?

Can we make a better decisionhere?

HAVE WE PROPERLY ASSESSEDRISK?

HOW TIME FRAMES HELP US MAKEBETTER DECISIONS


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OUR LONG TRIGGER ARRIVES

Stops?

What are the worst case

scenarios?Biggest mistakes traders make

we dont set targetswe put on size that is too bigwe over estimate our success

we underestimate possibledisaster

Targets?


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THE POWER OF THE GOLDEN RATIO

Stock prices are alwaysin a space of discovery

in an attempt to recapture

Their trajectories are notarbitrary but defined within

probabilitiesAlways ask yourself where is

theMOST LIKELY direction for the

stock ?Well usually discover we often

bet on the outside chance


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MOVING STOPS

Pros and cons of trailing stopsEasy to set and forget

Volatility

Why relative stops are smartestThey are tailored to general

stock rhythmWhere do we begin to take

profits?The all or none mindset

What is our strategy for re

entry?

PULLBACKS INTO RELATIVESUPPORT


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TREND REVERSALAND

THE DAY TRADER

Countertrend trades do notdeserve the same patience that

trending trades do

We day traders need the overall

daily chart trend if we tradetimeframes that are greaterthan 30minutes

Lets drill down for the day

trader


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THE LONG TRADE THROUGH THEGOLDEN RATIO SUCCESSFUL

As the trend goes, so does thestock

Notice the test and rest at 50%

but still upside resolution

What pattern formation is

obvious here?The channel my most favoredformation


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QUICK CHAT THROUGH FAILEDCHANNEL BREAKOUTS

Do not give these trades toomuch room

Broken trades

largely ignored in these venues

Since stocks often test their

breakout regions, stops should bejust inside the channel

Best new short entry on theswing trade


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REVISIT YOUR SETUPS

Where is the stock going toretest?

Failed breakdown does not mean

failed strategy

Where should your target be?

And what do Fibs tell us is themost likely action at the retestof our level?

Best new short entry on theswing trade


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The day trading conversation

USING SMALLER TIMEFRAMESDEFINES BETTER ENTRIES AND

EXITS

Gives us a chance to choose a premiumentry

TO LET THE PRICE COME TO US

Shows resolution much more quickly

Remember, a stock will test the door it just

went through to make sure it is closed

smaller timeframes assist us with that


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The i ersat i

A NEW SE T OF FIBS TRADE DIREC TIONAND

A CLOSER LOOKMOST OF US TRADE TIGHTER TIMELINES

What w ul

u r e w targets b e ?

Fib s are f racta ls

They re pli cate wi th i

the m se l

es

N t ice w here u r cand les ho ld s upp ort and

p resent congest ion

these ty p es o fp atterns re pli cate no m atter ho w s m a ll the t im e f ra m e

LETS LOOK AT A NEW TRADE


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The day trad ing conversat ion

NEWSHORT TERM DAY TRADE

OUR TRADE IS ON THE 15 MINU TE TIMEFRAME

What s the countertrend trade?What are e go ing to a it or to s igna l the

entry?Note the Fi leve l

What are our new targets?Short term?

Longer term?

Orange arrow is our irst observance p o int

A com pl ete retracement of a move is def ined by 100%Exp and your t imeframe so you k now

stronger forcesAs k yourse lf What s the trend trade?

Theimage cannotbe displayed.Your computer may nothaveenough memory toopen theimage,or theimagemay havebeen corrupted.Restartyour computer,and then open thefileagain.If thered x stillappears,you mayhavetodeletetheimage and then insertit again.


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OUR SHOR T TERM DAY TRADE CONTINUED

ON THE 15 MINU TE TIMEFRAME

Wo ul d yo u cons ider these cand lest ic k s c lear or mu ddy ?

Is the stoc k b ehav ing dec is ive ly in b et w een the Fib s ?

Do w e have a con fi r m at ion cand le ?What are o u r ne w targets ?

What s igna ls do w e have that s u ggest a

long trade ?

Does it m atter that the con fi r m at ion cand le is red ?


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OUR SHOR T TERM DAY TRADE CONTINUED

ON THE 15 MINU TE TIMEFRAME

Re m e mb er it is not an a ll or none ga m eIt s o k to b an k so m e p ro fi ts , day traders

Es p ec ia ll y d u e to the locat ion o f the m ov ing averages

Sca le do w n Sca le up up on reso lu t ion up s ideClose the p os i t ion

Not ice trad it iona l b ehav ior o f p r ice aro u nd

the Fib

What are so m e a pp ro p r iate dec is ions here ?


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A f e w m ore th ings a b o u t Fib b ehav ior

S trong Fib s

Wea k Fib s

S trong Fib

S trong Fib

Breach is a s igna lbu t w hat s igna l

Let s th in k thro u gh it

Wea k Fib s


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S trong Fib s

Wea k Fib s

S trong Fib

S trong Fib

J u st b eca u se a Fib i s w ea k, doesn t m ean act ion doesn t ha pp en there it is trend reversa l that is u n lik e ly at these leve ls

Wea k Fib s


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Wea k Fib s

Ha lf w ay p o int

Ha lf w ay p o int

Ta lki ng o u rse lves thro u gh the trade will k ee p u s f ro m careen ing over the edge


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In the confrontation between the river andIn the confrontation between the river andthe rock, the river always winsthe rock, the river always wins Not through strength , but throughNot through strength , but through

persistencepersistence

You simply cannot expect excellenceYou simply cannot expect excellence


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STREAMLINE YOUR TRADING LIFE AND CUT THE CLUTTER

CHARTING SOFTWARE

STOCK ANALYSIS TOOL

NEWS BASED TOOLS

STOCKTWITS / TWITTER STREAM THOUGH SPARINGLY

Distraction is death by a thousand cuts (or onebig cut)to the day trader


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CHARTING SOFTWARE

STOCK ANALYSIS TOOL

NEWS BASED TOOLS

TWITTER STREAM THOUGH SPARINGLY -Distraction is death by a thousand cutsto the day trader


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CHARTING SOFTWARE

STOCK ANALYSIS TOOL

NEWS BASED TOOLS

TWITTER STREAM THOUGH SPARINGLY -Distraction is death by a thousand cutsto the day trader


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TRADING PRINCIPLES ARE EASYBUT TRADING IS NOT IT IS COMPLEX

TRADING TAKES PATIENCEPATIENCE TO LEARNPATIENCE TO ENTER

PATIENCE TO EXIT

THE TRADING WORLD IS THE LAND OF RELATIVITYTHE SAME BEHAVIOR IN A DIFFERENT TIME AND PRICE OF THE CHART

MEANS SOMETHING DIFFERENT VERY OFTEN

REMEMBER TO TAKE OUT THE TELESCOPE DAYTRADERS BEFORE YOUSTART WITH THAT MICROSCOPE

AND MOST IMPORTANTLYMANAGE YOUR RISK CAREFULLY DONT LET THOSE LOSERS RUN


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VISIT THETRADINGBOOK.COM FOR INFORMATION ONMARKET ANALYSIS

DAILY CHARTS AND DAYTRADING TRIGGERS

FUTURES DAY TRADING LEVELSLIVE TRADING CHAT ROOM WHERE I TRADE ALL DAYCOVERED CALLS AND NAKED PUT OPTION STRATEGIES

MANAGED ACCOUNTSON DEMAND LEARNING AND LIVE WEBINAR LEARNING

EVENTS

Contact me directly at [email protected]

candlestick patterns around fibonacci levels

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