Fibonacci and Precision Sniping | Establish Your Trading Coordinate System
In the cryptocurrency market, simply looking at price fluctuations can easily lead to losing direction.
Through Fibonacci retracements and structured analysis,
traders can identify the movement of institutional "smart money."
Establish a high reward-to-risk entry system.
1. What is a Fibonacci Retracement?
The Fibonacci retracement lines (golden ratio lines) originate from a sequence discovered by mathematicians in the 13th century, characterized by the ratio of adjacent numbers approaching a constant of 0.618.
Unlike technical indicators that have lagging characteristics, it possesses "leading qualities"
that help traders set pending orders and layouts in advance.
2. How to Draw Lines on Charts
• Uptrend: Select the previous low and recent high, click from the low and move to the high, then release.
• Downtrend: Select the previous high and recent low, click from the high and move to the low, then release.
• Core Ratios: The retracement lines are composed of seven key numbers: 0, 0.236, 0.382, 0.5, 0.618, 0.764, and 1, where prices often pause or reverse around these ratios.
Precision Sniping Entry in 4 Steps
Combining Fibonacci with market structure, you can execute more precise trading plans:
Step 1: Identify the Cycle: Recognize the "Distribution Phase" in a smaller time frame.
Step 2: Wait for Retracement: Observe price compressing back towards the "Supply Area," usually accompanied by an upward wedge pattern.
Step 3: Confirm Entry: Enter when price is effectively pressured in the supply area, or when the upward wedge breaks downward.
Step 4: Set Targets: Place take profit at the previous key low level to ensure the trade's risk-reward ratio.
Practical Notes and Conclusion
1. Correction Magnitude: The Fibonacci retracement line can only exert its true trading effectiveness when the price correction magnitude exceeds 23.6%.
2. Combined Application: Not every touch of the retracement line will result in a reversal. It is recommended to combine Fibonacci with dynamic support, resistance levels, and other trading tools.
3. Day Trading: In a volatile market, use low-price buying and high-price selling (positive T) or selling first and buying back (reverse T) to profit from price differences and reduce holding costs.
Learn to observe market structure and the positions of buyers and sellers, and you will be prepared before trend reversals (such as when CHOCH signals appear).
The above is a personal viewpoint sharing and does not constitute investment advice. Investing involves risks; friends should evaluate cautiously.
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