Fibonacci retracements identify potential support and resistance levels by measuring the percentage pullback of a prior price swing using key Fibonacci ratios: 23.6%, 38.2%, 50%, 61.8%, and 78.6%. These levels often coincide with where pullbacks within trends tend to find support or resistance, making them essential for entry timing.
Key levels: 0.236, 0.382, 0.5, 0.618, 0.786. Measure from swing low to swing high (uptrend) or swing high to swing low (downtrend). 0.618 is the 'golden ratio' — the most widely watched retracement level. Fibonacci clusters: when levels from different swings converge. Extensions: 1.272, 1.618, 2.618 for profit targets.
Buy at 0.618 retracement with price action confirmation, Entry at Fibonacci cluster zone (multiple timeframe levels converging), 0.786 retracement as the last opportunity before invalidation, Combine with horizontal S/R for confluence
Enter at Fibonacci level, stop beyond the next deeper level or swing extreme. Target the Fibonacci extension (1.272 or 1.618). Partial profits at key Fibonacci levels as price extends.
Apply to the most recent clean swing on the timeframe you're trading
Fibonacci levels are not magic — they work because millions of traders watch them, creating self-fulfilling prophecy. The 0.618 and 0.5 levels are by far the most reliable. Always combine with other confirmation.
Multi-timeframe analysis (MTA) uses multiple chart timeframes to build a complete picture of market conditions. The higher timeframe provides trend direction and key levels. The intermediate timeframe confirms momentum. The lower timeframe provides precise entry timing. This 'top-down' approach dramatically improves trade quality.
Support and resistance (S/R) levels are price zones where buying or selling pressure has historically prevented the price from continuing in its current direction. Support is a floor where buying emerges; resistance is a ceiling where selling appears. S/R levels are the foundation of technical analysis and provide the framework for every trade setup.
Bollinger Bands consist of a middle band (20 SMA by default) and upper/lower bands set at 2 standard deviations from the middle. The bands expand during high volatility and contract during low volatility. The squeeze (narrow bands) often precedes a significant move, making Bollinger Bands excellent for volatility-based setups.
Donchian Channels plot the highest high and lowest low over a specified lookback period, creating a dynamic channel that defines the current price range. Originally popularised by the legendary Turtle Traders, Donchian Channel breakouts capture new trends at their inception by entering when price exceeds the prior range extreme. The channel width also serves as a volatility measure and position-sizing input.