🔥 Introduction
Fibonacci retracement levels highlight potential support/resistance zones, while candles show price reactions. Together, they help pinpoint entry zones with precision.
This guide covers:
- What are Fibonacci retracements?
- How to plot Fibonacci levels
- Candlestick signals at Fibonacci zones
- Strategy and examples
📏 What Are Fibonacci Retracement Levels?
Key ratios derived from Fibonacci sequence: 23.6%, 38.2%, 50%, 61.8%, 78.6% used to identify pullback zones within a trend.
🎯 Plotting Fibonacci Retracement
Identify swing high and swing low on chart
Draw Fibonacci retracement from high to low (for downtrend) or low to high (for uptrend)
Watch price reactions near these levels
🕯️ Candlestick Patterns at Fibonacci Zones
Bullish patterns (Hammer, Morning Star) near support retracement = entry buy signals
Bearish patterns (Shooting Star, Evening Star) near resistance retracement = sell signals
🔄 Strategy: Trade Entries with Fibonacci + Candles
Confirm overall trend direction
Wait for price to reach a key Fibonacci retracement level
Look for reversal candlestick pattern confirming the bounce or rejection
Enter trade after candle close
Place stop-loss just beyond the Fibonacci level
📈 Example
ETH is uptrending, retraces to 61.8% Fibonacci level
A Hammer candle forms here, signaling rejection of lower prices
Volume confirms strength
✅ Enter long with stop-loss below Fibonacci zone
✅ Tips
- Use Fibonacci levels in conjunction with other indicators
- Don’t rely on Fibonacci alone — candles must confirm price reaction
- Check multiple timeframes for confluence