Swing trading strategies with Fibonacci tools

<h2>Introduction – about this guide</h2>
Welcome to Fibonacci trading guide. 
Who is it for
This is a guide for people with some, even basic, trading experience. I show you how can you trade with Fibonacci, but you should have some knowledge about trading. 
Of course, I understand that people have different backgrounds. Because of that, I try to explain strategies and trading with Fibonacci as good as I can.
You don’t have to be a daytrader. You can have a job and use Fibonacci as swing trading strategy on higher timeframes. That is one of the biggest misconceptions that you have to be in front of the screen all the time. I know traders who have great results and they trade on 4-hour or daily timeframe. Of course, if you want to trade on lower timeframes that’s fine. Fibonacci works on every timeframe. Simply don’t put pressure on yourself that you have to day trade to make money. I write about it later in the section about money management.
What will you learn
As the name states, you will learn how to trade with Fibonacci. People often use Fibonacci tool for the basic task (for example to open a trade at 61.8% retracement). There are so many different ways you can use Fibonacci tools. Especially joining Fibonacci with Pivot Points can give you great setups. This is my favorite strategy and I think you will love it.
I show you different ways you can trade with Fibonacci. In the end, it will be your task to select the strategies that work best for you. 
How much money can you make by trading with these methods
It depends on your trading capital. Standard rules apply here so our goal is to follow risk management – that means we don’t want to risk more than 1-2% per trade. 
Fibonacci is a great foundation for solid strategy. Focus on learning process, work on your setups. As I like to say, money follows those who work on their setups and risk management.
<h2>Chart setup</h2>
This is a quick tutorial on how to setup Fibonacci levels in Metatrader. In other charting software it should be similar. The most important part is to use levels that you can find at the end of this part.
Setup in Metatrader
Where can you find Fibonacci Retracement in MetaTrader4?
Go to the top bar and find Fibonacci Retracement icon:
<img src="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader.png" alt="chart-setup-metatrader" width="403" height="142" class="aligncenter size-full wp-image-3432" srcset="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader.png 403w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader-300×106.png 300w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader-170×60.png 170w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader-400×142.png 400w" sizes="(max-width: 403px) 100vw, 403px" />
Or you can go to the top menu and select Insert -> Fibonacci -> Retracement:
<img src="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader2.png" alt="chart-setup-metatrader2" width="434" height="324" class="aligncenter size-full wp-image-3433" srcset="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader2.png 434w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader2-300×224.png 300w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader2-80×60.png 80w" sizes="(max-width: 434px) 100vw, 434px" />
How to change Fibonacci retracement and extension levels?
When you have selected the Fibonacci tool described in point 1., draw it on a chart. Now, double click on the line that goes from 0 to 100%:
<img src="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader3.png" alt="chart-setup-metatrader3" width="284" height="309" class="aligncenter size-full wp-image-3434" srcset="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader3.png 284w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader3-276×300.png 276w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader3-55×60.png 55w" sizes="(max-width: 284px) 100vw, 284px" />
And click mouse right button. Next, select Fibo properties:
<img src="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader4.png" alt="chart-setup-metatrader4" width="530" height="496" class="aligncenter size-full wp-image-3435" srcset="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader4.png 530w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader4-300×281.png 300w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader4-64×60.png 64w" sizes="(max-width: 530px) 100vw, 530px" />
Fibonacci retracement and extension levels list
In Fibo properties, go to the second tab. You will find there a table with two columns: Level and Description:
<img src="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader5-fibo-levels.png" alt="chart-setup-metatrader5-fibo-levels" width="668" height="328" class="aligncenter size-full wp-image-3436" srcset="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader5-fibo-levels.png 668w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader5-fibo-levels-300×147.png 300w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader5-fibo-levels-122×60.png 122w" sizes="(max-width: 668px) 100vw, 668px" />
Probably you will see some default values. You can edit fields and add new ones. 
<img src="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader6-final-setup.png" alt="chart-setup-metatrader6-final-setup" width="1024" height="479" class="aligncenter size-full wp-image-3437" srcset="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader6-final-setup.png 1024w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader6-final-setup-300×140.png 300w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader6-final-setup-768×359.png 768w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-metatrader6-final-setup-128×60.png 128w" sizes="(max-width: 1024px) 100vw, 1024px" />
Setup in TradingView
You can setup the Fibonacci tool in TradingView platform. It can look like in the screen below. You can, of course, change colors to others.
<img src="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-tradingview1.png" alt="chart-setup-tradingview1" width="762" height="406" class="aligncenter size-full wp-image-3439" srcset="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-tradingview1.png 762w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-tradingview1-300×160.png 300w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-tradingview1-113×60.png 113w" sizes="(max-width: 762px) 100vw, 762px" />
The configuration of levels in TradingView:
<img src="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-tradingview2.png" alt="chart-setup-tradingview2" width="531" height="294" class="aligncenter size-full wp-image-3440" srcset="http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-tradingview2.png 531w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-tradingview2-300×166.png 300w, http://marketsurvival.net/wp-content/uploads/2019/08/chart-setup-tradingview2-108×60.png 108w" sizes="(max-width: 531px) 100vw, 531px" />
Levels to use in your setup
Below you can find levels which you should use when you setup Fibonacci tool.
<table>
<tbody>
<tr>
<th>Level</th>
<th>Description</th>
</tr>
<tr>
<td>0</td>
<td>0.0</td>
</tr>
<tr>
<td>0.236</td>
<td>23.6</td>
</tr>
<tr>
<td>0.382</td>
<td>38.2</td>
</tr>
<tr>
<td>0.5</td>
<td>50.0</td>
</tr>
<tr>
<td>0.618</td>
<td>61.8</td>
</tr>
<tr>
<td>0.786</td>
<td>78.6</td>
</tr>
<tr>
<td>0.882</td>
<td>88.2</td>
</tr>
<tr>
<td>1</td>
<td>100</td>
</tr>
<tr>
<td>-0.27</td>
<td>127</td>
</tr>
<tr>
<td>-0.382</td>
<td>138.2</td>
</tr>
<tr>
<td>-0.618</td>
<td>161.8</td>
</tr>
<tr>
<td>-1</td>
<td>200</td>
</tr>
</tbody>
</table>
<hr>
<h2>Timeframes, market structure, different trading styles</h2>
Before we move to the Fibonacci tactics we have to talk about market structure, timeframes, and multi timeframe analysis. These topics are confusing for some traders. They are crucial if you want to be a successful trader.
<h3>Market structure</h3>
Before we learn more about the Fibonacci retracements, let’s focus on price behavior for a minute.
Let’s start from one tricky question and the basics of price behavior. In which direction can price move? You will probably answer: up and down. This answer is correct, there is a “but” though. What if there is no main trend? If there is no strong trend, the price will probably move sideways. Statistics say that the price is moving about 30% of the time in a trend and the rest of this time it is moving in a range. Why is moving in a range such a bad thing? It is because there is no clear direction and the price moves up and down, so it is very hard to make money in this kind of movement. Have a look at the chart below, is it the way you would like to trade in?
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/sideway-move-range-move.jpg" alt="sideway-move-range-move" width="558" height="252" class="aligncenter size-full wp-image-3445" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/sideway-move-range-move.jpg 558w, http://marketsurvival.net/wp-content/uploads/2018/08/sideway-move-range-move-300×135.jpg 300w, http://marketsurvival.net/wp-content/uploads/2018/08/sideway-move-range-move-133×60.jpg 133w" sizes="(max-width: 558px) 100vw, 558px" />
No, it is not. It is a very tough market to stay profitable. Unless you like to trade in a range (there are trading strategies which work best in range market condition), you should avoid this kind of market. The best way is to wait until it is over and then start to make money when the trend is back.
Price can be trending up, down or move sideways. Of course, we look for investment opportunities in an up and downtrend, trying to avoid investing when there is no clear direction.
Let’s assume that we have identified an uptrend. Does the price go up all the time? No, it makes higher highs and higher lows. This is a sign for us that there is an uptrend. It may look similar to the example below:
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/uptrend-example-higher-highs.jpg" alt="uptrend-example-higher-highs" width="548" height="462" class="aligncenter size-full wp-image-3446" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/uptrend-example-higher-highs.jpg 548w, http://marketsurvival.net/wp-content/uploads/2018/08/uptrend-example-higher-highs-300×253.jpg 300w, http://marketsurvival.net/wp-content/uploads/2018/08/uptrend-example-higher-highs-71×60.jpg 71w" sizes="(max-width: 548px) 100vw, 548px" />
It is similar when there is a downtrend. The price makes lower highs and lower lows. Again, look at the chart below and you should understand it right away:
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/downtrend-example-lower-lows.jpg" alt="downtrend-example-lower-lows" width="589" height="482" class="aligncenter size-full wp-image-3447" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/downtrend-example-lower-lows.jpg 589w, http://marketsurvival.net/wp-content/uploads/2018/08/downtrend-example-lower-lows-300×246.jpg 300w, http://marketsurvival.net/wp-content/uploads/2018/08/downtrend-example-lower-lows-73×60.jpg 73w" sizes="(max-width: 589px) 100vw, 589px" />
Can you see the clear sequence of this move? There is a certain noise around it, but you should be able to spot significant highs and lows.
This behavior gives us important information. First of all, we are able to identify the current trend. When we are able to see the higher highs, we can draw the Fibonacci retracement levels. Identification of the turning points (higher highs and higher lows or lower highs and lower lows) is necessary to draw retracement correctly. You can read how to draw it in a little while.
Remember: in some unusual cases, the price will go straight up or down. This happens mostly when some unexpected news is causing panic or euphoria among investors. It looks promising on a chart, but trading this is very hard. You have to take your position early; otherwise, later your entry point will be very risky.
<h3>You always start by analyzing higher timeframes</h3>
That’s the step nr 1 in your trading with Fibonacci (and any other strategy). Even if you trade on lower timeframes such as 30 or 60-minutes, you still start from higher timeframe. 
You go to monthly, then switch to weekly, then daily, then 4-hour and so on. On each timeframe, you look for important support/resistance lines and trendlines. 
You also have a look for important price patterns. Things like a dark cloud or pinbars on higher timeframes are usually very powerful and give you an idea in which direction should you trade.
Why higher timeframes are so important?
There are a few reasons. 
First, you avoid unnecessary loses. There are no perfect systems and you will have some losing trades, that’s normal and that’s why we have risk and money management. Still, if you can avoid few losing trades your trading record would be probably much better. 
When you do a proper analysis on higher timeframes you have knowledge about important trendlines and levels. For example, based on your trading strategy you have a buy signal on the 1-hour timeframe and you want to open a long position. When you checked weekly timeframe, you noticed that there is an important resistance. You decide not to open long trade and you wait for reaction with that level.
The second reason is that thanks to higher timeframes analysis you can find the very good Fibonacci setup. Continuing a previous example. You saw that there is no point to go long because this is strong resistance. At levels like this, we often will see some pullback. Sometimes it will be a short-lived pullback, sometimes longer or even trend reversal. Anyway, this is always a good place to hunt for Fibonacci trade.
Multiple timeframe analysis – preparation
Of course, the situation on higher timeframes such as weekly isn’t that dynamic as on lower timeframe. Thanks to that it is ok to check this higher timeframes from time to time. My recommendation is to analyze them on weekends. Markets are closed and you can focus on analysis without distraction from moving prices.
Many traders talk about Sunday preparation and there is a good reason for that. If you want to have the best results, you have to put your time and effort and prepare for each trading week.
Tools and multiple time frame analysis
Unfortunately, only some charting software allows you to easily analyze the situation on higher timeframes. You can switch between them but you are not able to analyze a few of them at once. 
The best tool which can help you do just that is Trading View. When you check right corner you will see different setup options – you can have few timeframes open in different configurations. 
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/trading-view-multiple-timeframes.png" alt="trading-view-multiple-timeframes" width="287" height="336" class="aligncenter size-full wp-image-3448" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/trading-view-multiple-timeframes.png 287w, http://marketsurvival.net/wp-content/uploads/2018/08/trading-view-multiple-timeframes-256×300.png 256w, http://marketsurvival.net/wp-content/uploads/2018/08/trading-view-multiple-timeframes-51×60.png 51w" sizes="(max-width: 287px) 100vw, 287px" />
Which can look like this:
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/trading-view-multiple-timeframes-example.png" alt="trading-view-multiple-timeframes-example" width="1193" height="577" class="aligncenter size-full wp-image-3449" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/trading-view-multiple-timeframes-example.png 1193w, http://marketsurvival.net/wp-content/uploads/2018/08/trading-view-multiple-timeframes-example-300×145.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/trading-view-multiple-timeframes-example-768×371.png 768w, http://marketsurvival.net/wp-content/uploads/2018/08/trading-view-multiple-timeframes-example-1024×495.png 1024w, http://marketsurvival.net/wp-content/uploads/2018/08/trading-view-multiple-timeframes-example-124×60.png 124w" sizes="(max-width: 1193px) 100vw, 1193px" />
If your charting software doesn’t have such an option then you can open the same chart twice with different timeframes. This is how I trade in Metatrader – for example, I open 1-hour timeframe (my main timeframe) and second tab with 4-hour or daily timeframe. This way I can place some markups, trendlines etc. on the higher timeframe and my 1-hour timeframe stays clear.
Why this is a good way to analyze the situation at the market?
When you have open only one timeframe, you have to switch between timeframes and you have to mark important levels to have them on lower ones. 
With few timeframes open at the same time you see much clearer what is going on. For example, my typical setup is 1-hour, 4-hour and daily or weekly. If price approach 50 average on daily timeframe I see it right away. That’s only a simple example – there will be many times when information from higher timeframe will help you to make better decisions.
<h3>Which timeframe is best for trading</h3>
There is no simple answer, but there are things you should know.
First, you don’t have to trade on lower timeframes to make more money. That’s an old and stupid myth, still, some people trade on lower timeframes mainly because of that belief. 
Statistic says it all – largest number of profitable traders use higher timeframes like 4-hour, daily. When we look at the number of profitable traders on lower timeframes, that number is much lower. There is a reason for that – lower timeframes have more noise and it is very easy to overtrade here.
You should not try to trade on timeframes such as 1-minute, 5-minutes, 15-minutes. These are timeframes where we have too much noise and fast moves. Remember, more than 50% of trades are made by trading robots. We can find many of them trading on lower timeframes and you don’t have chances here to compete with them.
Tradeable timeframes start from 30-minute timeframe. This timeframe is ok for some instruments, for some not. 
My recommendation is to select from timeframes such as 1-hour, 4-hour, daily. Although, for some traders, it is best to use 4-hour and daily. Remember, the higher the timeframe the better chances to be profitable with your trading. When you trade on higher timeframe like daily you are able to catch bigger moves. You also can have a day job and spend less time in front of the screen which is also a benefit (the less time you spend in front of the charts, the fewer decisions and overthinking).
<h3>Day trading vs swing trading</h3>
Fibonacci works great when you look for swings. You can enter during a correction and catch most of the move thanks to Fibonacci Extensions. Swing trading is a way to grow your account. When you use swing trading tactics on higher timeframes, you are able to catch bigger swings (moves). Bigger moves mean bigger profits. 
Fibonacci works on every timeframe and you can use it in a day trading for example when you trade on 5-minute or 15-minute timeframe. The moves you will catch will be not that big and it is very easy to overtrade here. 
That’s why when you want to select the best timeframe for trading remember that day trading is not the best choice for most traders. You should build your strategy around swing trading on higher timeframes. That’s the combination which will give you the best chances to survive and be profitable.
<h3>Long term trading</h3>
There is a group of long-term traders who keep the position open for weeks, months or even longer. Usually, they trade stocks or other instruments. They use daily, weekly and monthly timeframes for their analysis. Sometimes they have few accounts – one for normal swing trading on shorter timeframes, other for longterm trading (pension funds and so on).
Longterm strategies are also great. As you already know, Fibonacci works also on higher timeframes so there is no problem to use it on weekly or monthly timeframes, for example, to take profit at 161.8% extension.
<h2>Before we move to the entry strategies</h2>
There are few important things you should know before we jump into Fibonacci strategies. I collect them together in this chapter because you should be aware of them.
<h3>Important – contrarian trading (how to think like a Fibonacci trader)</h3>
In short, you look for corrections and you try to enter when they end. For example, when we have an uptrend and there is a correction down then we want to open a trade. 
For many new traders that part is hardest to master. Price is going down and I should buy? That’s against a trend.
No, the main trend is up. The short-term trend is down. We look for confirmation that this short-term move ended and then we want to buy. You can learn in the chapter about entries how to do it.
Look where you can find most traps set for retail traders by market makers:
Yes, on the breakouts. That’s why I stopped to trade breakouts many years ago. There are good trades who use breakouts in their strategies. I simply prefer to entry my trades near important retracement levels during a correction. Fewer traps, better risk-reward ratio.
Looking for a correction during a trend is one thing. There are other setups which require you to think like a truth contrarian. Reversals. They give opportunities to make great profits but you have to have a good risk management strategy and follow it. 
So we are talking about situation where the trend is well established for some time but we see a sign of reversal and we decide to trade against a trend. Take a look at the example below:
That’s not something that you will learn in most guides which talk mostly about trend trading and following a trend. It may seem risky at first to trade against a trend but it isn’t, especially when you use Fibonacci tools. This setup played during reversals give you good chances to make solid profits. Also, stop loss levels are usually pretty easy to set so it is rather easy to keep your risk management in check.
Still, this is a contrarian thinking about markets that you have to master. Is it a simple correction which I can use to open a trade in the direction of the main trend? Is it a reversal which I can use to open a trade against the main trend?
When you master thinking like a contrarian and join it with Fibonacci techniques, you will be a successful trader. 
<h3>Fibonacci is not a trend trading</h3>
When we trade with Fibonacci, we want to know market conditions – what trend is on the current timeframe, what trend is on higher timeframes. We use trend as our playground to find trades with Fibonacci but we are not trend trading. 
Our goal, us Fibonacci traders, is not to catch most of the trend. Fibonacci trading is more to swing trading. We want to catch swing move between point C (end of correction near retracement lined) and point D (end of move-swing at Fibonacci extension line).
You see price approaching your take profit target at Fibonacci extension line, you close a trade when the target is hit. Next, you look for another setup. You do not hope here – oh, maybe this will go higher, maybe this is some stronger move and I should keep it open for a longer period of time.
No.
That’s a rather common mistake that traders initially have good take profit targets but they move them higher or even remove because they think that they catch something big. 
Of course, if we see that trend is strong we can use multiple swings with Fibonacci setups to maximize our profits. You will learn about it in the section about trade and money management.
<h3>Your job – finding best RR setups</h3>
We can find Fibonacci setups on any timeframes. Even more, you can apply Fibonacci levels to almost any swing.
Your job is to select setup with best Risk Reward ratio. To do that, you want to enter a trade deep during a correction. That will give you a good place to set stop loss. 
If you enter a trade with small risk (small stop loss) that means that your potential reward will be bigger:
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/risk-reward-example.png" alt="risk-reward-example" width="719" height="529" class="aligncenter size-full wp-image-3450" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/risk-reward-example.png 719w, http://marketsurvival.net/wp-content/uploads/2018/08/risk-reward-example-300×221.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/risk-reward-example-82×60.png 82w" sizes="(max-width: 719px) 100vw, 719px" />
We always want to enter near retracement and close near extension. That means that the better entry is the better overall Risk-Reward. 
Do not force yourself into opening trade at every decent setup you see. Sometimes it is a good idea to skip entry and wait for other, better setups.
Quality, not quantity. If you start to look at your Fibonacci setups from the perspective of RR then you will have much better results.
<h3>Candle close, confirmation from the price</h3>
Markets are changing. I trade for some time and I can tell you that the level of manipulation and false moves is so much bigger than even a few years back. The main reason for that is the larger number of automated trading. Add to that market makers and bulls/bears traps and you have a pretty dangerous mix.
Sure, we had some manipulations or automated trading before so it is not like this is something we should be surprised about. 
There is no way to avoid traps and manipulation in 100% of cases. Still, there is a simple thing you can do to at least avoid a few traps here and there.
Wait for candle close before opening a trade.
Do you trade on 1-hour timeframe? Wait for the close of 1-hour candle.
Do you trade on 4-hour timeframe? Wait for the close of 4-hour candle.
And so on. You know what I mean.
On many times you will see the big, beautiful bullish candle. It looks like we have here an engulfing pattern and breaks above the trendline. You don’t want to miss this trade, bulls are crushing it. You open a long position. There are still 40 minutes before there will be a close of a candle. Suddenly, bears start to take control. First, there is a small pullback and shadow (wick) at the top. Bears are pushing the price down harder and candle closes as shooting star and not an engulfing pattern. Next, you observe price getting to new lows and you have still your long position open.
You could avoid that entry if you waited for a close fo a candle. 
Market makers like to create false moves to catch retail traders on the wrong side. It can take some time and a few different traps. Eventually, the main move takes place and it is in another direction that most retail traders opened a trade. 
Waiting for a close of the candle is not a bulletproof solution for that problem, but it will help you to avoid many traps. 
If you have a problem with waiting for a close, add a timer. It is available in many charting software. It simply puts time left to open a new candle. Then you simply decide to wait for the timer to reset (candle to close) to open a trade.
<h3>Types of corrections</h3>
We have two types of corrections:
<ul>
<li> simple correction</li>
<li> complex correction</li>
</ul>
Simple correction – as the name says it, is a simple swing move to the C point. After that, we observe continuation in the direction of the main trend. 
The complex correction means that we have more action between B and C point before we saw a breakout.
It can be for many reasons:
<ul>
<li> Sometimes we have simply a range move in that area and price needs to break out of the box. </li>
<li> We may observe the forming of harmonic patterns (Gurley and others, more about them in a minute). </li>
<li> We may observe the forming of a price pattern (wedge, pole, channel or some other). </li>
</ul>
We should remember about these different types.
Usually, when the move is strong, we can observe a simple corrections time after time. Trading then is easy and we can make good money here.
There are times when correction move will be more complex. We should remember about such a possibility. In cases like this, it is not enough to rely on signals from oscillators – they work well during simple corrections, but during complex ones, they tend to give false signals. 
During a complex correction, it is best to use trendlines and look for patterns. On many times you will simply wait for a breakout from that pattern.
We will talk about it more in next chapters. For now, remember that there are different types of corrections. Traders tend to lose money during complex corrections because they follow each signal and as you already know during a complex correction you have many false signals. That’s why trading with patterns is so useful in this kind of moves. 
<h3>Fibonacci – does it work?</h3>
You may find many articles or videos where people debate if Fibonacci really works or not. I want to shortly address this problem.
Authors of all these articles and videos claiming do not fully understand how you trade with Fibonacci.
First, and most important thing, Fibonacci tools are simply that – tools. This is not a ready strategy like for example Ichimoku. With Ichimoku, you have both overviews of the situation in the markets and many signals to go long or short. 
Fibonacci tools give you possible levels of resistance/support and possible levels to close a trade. You never know in advance where the current move will end – probably at one of the Fibonacci levels but which one exactly? 
Your job is to build a trading strategy around Fibonacci tools. Your trading results depend on that strategy.
This is a goal of this guide – to help you build such a strategy. 
<h3>Fibonacci works both ways – why is this confusing</h3>
That’s something that you will learn when you trade with Fibonacci for some time. You find a swing, place Fibonacci retracement lines and they fit perfect. You open trade but after some time it goes against you. But why? It touched retracement lines. Yes, but if you draw Fibo the other way it will also fit the same swing. 
Sometimes it even funny how Fibo works so perfect in both direction. That makes our job to enter in the right way much harder. That’s why we want to use some sort of confirmation before we open a trade.
Just remember that you will find Fibonacci retracement working on the same swing in both directions. 
<h2>ENTRY STRATEGIES</h2>
<h3>How to draw the retracement levels? It is easy like ABC</h3>
So far, we have learned that it is very rare for a price to move in one direction for a longer time. Surely, when there is panic or euphoria on the market because of some big news, prices may skyrocket and it is hard to enter the trade.
In most cases though, the price moves in zigzag shapes. Some traders call it waves, and there is a scientific concept called Elliott wave theory. But for us, it is important to know the nature of these moves. First, we need to identify a swing move that is a move from point A to point B. We know already that after the main swing there should be a correction in the opposite direction to point C. When we see a move from point A to B, we wait for a move down (correction) to point C. Point C should be located between points A and B. On a chart illustrating an uptrend it may look like this:
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/abc-swing.png" alt="abc-swing" width="201" height="206" class="aligncenter size-full wp-image-3452" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/abc-swing.png 201w, http://marketsurvival.net/wp-content/uploads/2018/08/abc-swing-59×60.png 59w" sizes="(max-width: 201px) 100vw, 201px" />
It is not always so easy to identify points A, B, and C, but it gets easier with time and experience. When we are sure that we have found the ABC move, we can draw a Fibonacci retracement with a tool from our chart software. We start from the low of swing to the high, so from point A to point B.
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/abc-swing-with-fibonacci.jpg" alt="abc-swing-with-fibonacci" width="548" height="317" class="aligncenter size-full wp-image-3453" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/abc-swing-with-fibonacci.jpg 548w, http://marketsurvival.net/wp-content/uploads/2018/08/abc-swing-with-fibonacci-300×174.jpg 300w, http://marketsurvival.net/wp-content/uploads/2018/08/abc-swing-with-fibonacci-104×60.jpg 104w" sizes="(max-width: 548px) 100vw, 548px" />
If you use candle charts, you should draw from the low of the shadow (or peak) of a candle to the high of a candle. Please, notice that you get much more accurate results when you apply the retracement levels to your candle chart. Compare it with the results from the above chart.
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/abc-swing-with-fibonacci2.jpg" alt="abc-swing-with-fibonacci2" width="366" height="240" class="aligncenter size-full wp-image-3454" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/abc-swing-with-fibonacci2.jpg 366w, http://marketsurvival.net/wp-content/uploads/2018/08/abc-swing-with-fibonacci2-300×197.jpg 300w, http://marketsurvival.net/wp-content/uploads/2018/08/abc-swing-with-fibonacci2-92×60.jpg 92w, http://marketsurvival.net/wp-content/uploads/2018/08/abc-swing-with-fibonacci2-294×194.jpg 294w" sizes="(max-width: 366px) 100vw, 366px" />
How do you know if you have chosen the right top and bottom? It is a little bit like art and comes with time. At times, when you have two bottoms nearby, even if you have selected the wrong one, it is not going to change the position of the retracement levels so much. Just practice on the price history.
Should the price touch the retracement levels?
This is always a problem for new investors. They think that the retracement to point C is only valid when the price touches down this Fibonacci level. They are wrong. Fibonacci retracements are a great tool, but there is no 100% accuracy. Sometimes the price closes near the retracement level and it can be still a valid move. Just look at the example below.
Example. In a downtrend, there was a correction up. The price looked as if it would move up to 50% retracement level, but it did not happen.
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/candle-close-fibonacci.jpg" alt="candle-close-fibonacci" width="417" height="226" class="aligncenter size-full wp-image-3455" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/candle-close-fibonacci.jpg 417w, http://marketsurvival.net/wp-content/uploads/2018/08/candle-close-fibonacci-300×163.jpg 300w, http://marketsurvival.net/wp-content/uploads/2018/08/candle-close-fibonacci-111×60.jpg 111w" sizes="(max-width: 417px) 100vw, 417px" />
We look at candle close here and we can see that both candles closed below the 38% level so this was our point C and 38% retracement was resistance for the price. Next, the price moved back to a downtrend. On numerous occasions, the price will touch exactly specific retracement level. However, be aware that sometimes it may not look that perfect. 
What retracement levels should I use?
It is very confusing at the beginning because there are many Fibonacci retracement levels and some people use only specific ones, while others like to draw all the retracements. My advice is to try to use the standard levels. Over time, when you gain more experience, you will decide which are the most important ones and which ones you prefer to use.
So, which levels should you start with?
<ul>
<li> 23.6%</li>
<li> 38.2%</li>
<li> 50%</li>
<li> 61.8%</li>
<li> 78%</li>
<li> 88.2%.</li>
</ul>
Why use 50%? It is not a Fibonacci retracement, but still an important level (half way up or down), so traders like to keep this retracement level together with other proper levels. Stick to these levels and it should be enough to trade well when it comes to price correction.
<h3>Strategy – right at retracement line</h3>
This is a simple one but you need to practice it a lot. You open a trade right at 61.8% retracement line. You can select another retracement like 78.2% or 88%.
Some people like to use this strategy with 50% retracement but my recommendation is to use 50% on swings on a higher timeframe. They work better there. 
How this strategy works. 
You don’t wait for confirmation from current timeframe. For example, if you’ve found an AB setup on the 1-hour timeframe, you don’t wait for confirmation, you enter simply right at retracement line. In this example, a pending buy order at 61.8% would be a great entry:
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/strategy-entry-at-fibonacci.png" alt="strategy-entry-at-fibonacci" width="791" height="442" class="aligncenter size-full wp-image-3456" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/strategy-entry-at-fibonacci.png 791w, http://marketsurvival.net/wp-content/uploads/2018/08/strategy-entry-at-fibonacci-300×168.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/strategy-entry-at-fibonacci-768×429.png 768w, http://marketsurvival.net/wp-content/uploads/2018/08/strategy-entry-at-fibonacci-107×60.png 107w" sizes="(max-width: 791px) 100vw, 791px" />
If you really want, you can go to the very low timeframe and wait for confirmation here. Below you can see the same chart but on the 5-minute timeframe. After price hit 61.8% level, there was a nice bullish candle – confirmation that this level works as support (at least at the moment):
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/strategy-entry-at-fibonacci-confirmation.png" alt="strategy-entry-at-fibonacci-confirmation" width="451" height="296" class="aligncenter size-full wp-image-3457" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/strategy-entry-at-fibonacci-confirmation.png 451w, http://marketsurvival.net/wp-content/uploads/2018/08/strategy-entry-at-fibonacci-confirmation-300×197.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/strategy-entry-at-fibonacci-confirmation-91×60.png 91w, http://marketsurvival.net/wp-content/uploads/2018/08/strategy-entry-at-fibonacci-confirmation-294×194.png 294w, http://marketsurvival.net/wp-content/uploads/2018/08/strategy-entry-at-fibonacci-confirmation-384×253.png 384w" sizes="(max-width: 451px) 100vw, 451px" />
But remember – the goal here is to open trade as close to the retracement as possible.
About stop loss. You place it tight. When the position is in profit you move it fast to breakeven.
Few more tips. 
This strategy works best on the most important swings so we talk about swings based on major moves. You will find them on higher timeframes like 1h, 4h, daily and other higher. 
Some instruments are better to trade with this strategy, some not. Some pairs will respect 61.8%, some will have a tendency to test another retracement like 78.2% etc. You have to check it by yourself.
Check gold – it is respecting 61.8% on many times. It is a good place to start testing this strategy. 
What is this strategy is really about?
This strategy may seem strange but there is the logic behind it. 
You look for trades with good Risk Reward ratio and with help of this strategy you can have setups just like that. The bigger the RR ratio in your favor, the more failed trades you can have. For example, if you average risk reward 1:5 then you can easily be right only 20% of the time and still make money.
This strategy works because traders and institutions look for these areas to take profits or open positions. On some times you will see the only a small reaction from the price, on other times there will be a turning point and start of a new leg. 
Remember that the best chances are on higher timeframes. That means that on lower timeframe like 5 minutes this strategy won’t be as good as on higher timeframe like 4-hour, daily and so on. It is all about the importance of retracement line from bigger swings – the bigger swing, the more important retracement lines are.
<h3>Price pattern, price actions strategies</h3>
Price patterns are very powerful even when you are trading only with them. 
It takes time to master price action, but it is worth to put the effort to learn how to use them in trading. Of course, trading with price action is a very wide topic itself and you can read a book about it. Later in this chapter, I show you how can you use candlestick patterns together with Fibonacci.
When we look for candles
The improtant thing to remember about. Most of the candlestick patterns described later can occur at different stages of the move. That means that they can place in the middle of the trend, in the end, and so on. Our goal is to find candlestick patterns at the end of correction which will be our entry signal. We ignore these patterns in the middle of the move.
Fibonacci and bearish candlestick patterns
In this part, we will have a look at bearish candlesticks which help us to open short positions.
<h4>Shooting star</h4>
A shooting star is a very characteristic candle with a small body and long shadow. When we see shooting star near the retracement line then we have important information that this level is a strong resistance for the price.
Stop loss is set tide – it may be set right above shooting star or above next retracement line. In the example above stop could be placed above 78.2% retracement.
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/fibonacci-shooting-star.png" alt="fibonacci-shooting-star" width="532" height="428" class="aligncenter size-full wp-image-3459" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/fibonacci-shooting-star.png 532w, http://marketsurvival.net/wp-content/uploads/2018/08/fibonacci-shooting-star-300×241.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/fibonacci-shooting-star-75×60.png 75w" sizes="(max-width: 532px) 100vw, 532px" />
We want to see a shooting star at the end of a strong move up like in the example above. Sometimes we will see them in range moves like below. In cases like this you should ignore them:
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/shooting-star-range.png" alt="shooting-star-range" width="345" height="288" class="aligncenter size-full wp-image-3460" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/shooting-star-range.png 345w, http://marketsurvival.net/wp-content/uploads/2018/08/shooting-star-range-300×250.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/shooting-star-range-72×60.png 72w" sizes="(max-width: 345px) 100vw, 345px" />
<h4>Evening Doji Star</h4>
It is simply a doji candle at the end of move up. This is a candle which you can see on rare occasions. If you spot it like in this example, near the retracement line that means that bulls and bear are fighting at this level. What you want to see after that is another bearish candle as a confirmation. Then you can enter. 
Below you can see that later there was some manipulation and stop hunting, but the signal from doji was valid. It showed us that area near 78.2% retracement is a resistance.
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/doji-star-fibonacci.png" alt="doji-star-fibonacci" width="333" height="268" class="aligncenter size-full wp-image-3461" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/doji-star-fibonacci.png 333w, http://marketsurvival.net/wp-content/uploads/2018/08/doji-star-fibonacci-300×241.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/doji-star-fibonacci-75×60.png 75w" sizes="(max-width: 333px) 100vw, 333px" />
In the next example, you can see a doji right at 61.8% retracement and next, near 50% retracement. This way we got multiple signs that these retracement lines work and that this Fibonacci retracement setup is valid. 
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/doji-star-fibonacci2.png" alt="doji-star-fibonacci2" width="604" height="435" class="aligncenter size-full wp-image-3462" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/doji-star-fibonacci2.png 604w, http://marketsurvival.net/wp-content/uploads/2018/08/doji-star-fibonacci2-300×216.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/doji-star-fibonacci2-83×60.png 83w" sizes="(max-width: 604px) 100vw, 604px" />
<h4>Dark Cloud Pattern</h4>
My favorite price pattern. Very clear information about what is going on with the price and who is winning. 
We look at two candles. The first candle is bullish, second bearish. 
We can read this price action like this: 
We saw a bullish candle. After that, the next candle opened higher but bulls were too weak and bears took control. That means that we can expect at least some correction down. 
Stop loss is tight, you can wait for another candle to confirm that bears are in control. 
I prefer to place my entry point a few points below dark cloud candle. Just like in the example below. There was a dark cloud pattern near 38.2 retracements but next, we saw the last attempt to go higher. In the end, this 38.2% level was still holding as resistance and price went down. Short entry placed a few pips below dark cloud would be perfect.
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/dark-cloud-fibonacci.png" alt="dark-cloud-fibonacci" width="408" height="281" class="aligncenter size-full wp-image-3463" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/dark-cloud-fibonacci.png 408w, http://marketsurvival.net/wp-content/uploads/2018/08/dark-cloud-fibonacci-300×207.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/dark-cloud-fibonacci-87×60.png 87w" sizes="(max-width: 408px) 100vw, 408px" />
In the next example, dark cloud was right at 78.2% retracement line. Again, entry few pips below this dark cloud and tight stop loss above would be a perfect setup here.
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/dark-cloud-fibonacci2.png" alt="dark-cloud-fibonacci2" width="587" height="318" class="aligncenter size-full wp-image-3465" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/dark-cloud-fibonacci2.png 587w, http://marketsurvival.net/wp-content/uploads/2018/08/dark-cloud-fibonacci2-300×163.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/dark-cloud-fibonacci2-111×60.png 111w" sizes="(max-width: 587px) 100vw, 587px" />
Sometimes you will see dark cloud many times during a trending move. Traders like to check how big the cloud is. You can see that the first dark cloud marked below was rather small. Especially when you compare it with the second one, which was much bigger. This is another thing you can check when you look for the dark cloud.
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/dark-cloud-trend.png" alt="dark-cloud-trend" width="530" height="418" class="aligncenter size-full wp-image-3466" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/dark-cloud-trend.png 530w, http://marketsurvival.net/wp-content/uploads/2018/08/dark-cloud-trend-300×237.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/dark-cloud-trend-76×60.png 76w" sizes="(max-width: 530px) 100vw, 530px" />
<h4>Bearish Engulfing Pattern</h4>
In this pattern, a bearish candle has a bigger body than a bullish candle before. What’s more, open from the bearish candle is higher and close is lower than open and close of the bullish candle.
That’s a clear indication that bears are stronger, at least at the moment. We can use this pattern as a signal to entry short. My suggestion would be to use it only if it takes place near some important retracement line. In the example below bearish engulfing pattern can be seen near 88.2% retracement line, a few hours later near 61.8% retracement. This was good places to enter a short position.
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/bearich-engulfing-fibonacci.png" alt="bearich-engulfing-fibonacci" width="431" height="256" class="aligncenter size-full wp-image-3467" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/bearich-engulfing-fibonacci.png 431w, http://marketsurvival.net/wp-content/uploads/2018/08/bearich-engulfing-fibonacci-300×178.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/bearich-engulfing-fibonacci-101×60.png 101w" sizes="(max-width: 431px) 100vw, 431px" />
As mention before, I use a bearish engulfing pattern only when it is near an important retracement line. You will see this pattern a lot more. You can use it for other analysis. The bearish engulfing pattern can take place at the end of the move like in the example below. If you see this pattern in a strong uptrend that means that change in direction is possible.
You can also see this pattern during stronger downtrends. This is simply a validation that trend is strong and continuation of move down is possible.
In the example below, you can see two bearish engulfing patterns next to each other after a strong move up. This was a very strong indication that we can see a change in direction. Later we saw another try from the bulls and eventually bears took control. On the right side of the chart, in the downtrend, you can see another two bearish engulfing patterns – information that trend is strong and the price will probably go down even more. 
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/price-pattern-reversal.png" alt="price-pattern-reversal" width="472" height="387" class="aligncenter size-full wp-image-3468" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/price-pattern-reversal.png 472w, http://marketsurvival.net/wp-content/uploads/2018/08/price-pattern-reversal-300×246.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/price-pattern-reversal-73×60.png 73w" sizes="(max-width: 472px) 100vw, 472px" />
Bullish candlestick patterns
In this section, we will have a look at bullish patterns which help us to decide when to open a long position during a correction.
<h4>Bullish hammer</h4>
Small body, long shadow below. That means that bears tried to push price lower but bulls came back with bigger force. This is a good reversal candle because it shows us a place in which there might be a change in control over trend. 
When we see bullish hammer near retracement line that means that bulls may try to attack further from this specific retracement. 
Stop loss is tight, you can enter right above the hammer candle.
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/bullish-hammer-fibonacci.png" alt="bullish-hammer-fibonacci" width="415" height="284" class="aligncenter size-full wp-image-3470" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/bullish-hammer-fibonacci.png 415w, http://marketsurvival.net/wp-content/uploads/2018/08/bullish-hammer-fibonacci-300×205.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/bullish-hammer-fibonacci-88×60.png 88w" sizes="(max-width: 415px) 100vw, 415px" />
In the example below, we can see a few hammer candles. First, at the end of correction at 61.8% retracement line, next at 38.2% retracement line. That was information that buyers were using these retracement levels to open long positions. Next, there was a move to 200% extension.
After that, we saw another, third hammer but this time the trend changed.
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/bullish-hammer-fibonacci2.png" alt="bullish-hammer-fibonacci2" width="533" height="329" class="aligncenter size-full wp-image-3471" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/bullish-hammer-fibonacci2.png 533w, http://marketsurvival.net/wp-content/uploads/2018/08/bullish-hammer-fibonacci2-300×185.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/bullish-hammer-fibonacci2-97×60.png 97w" sizes="(max-width: 533px) 100vw, 533px" />
<h4>Piercing line pattern</h4>
A pattern similar to a dark cloud, just for the other side. We have a bearish candle, after that there is an open lower but bulls come back with force.
This candle pattern is pretty common, you will see it a lot during trend moves. It can work as a signal but only if it takes place near important retracement line. In the example below there was a piercing line pattern right at 61.8% retracement – indication that after correction bulls try to move price higher from that place.
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/piercing-line-fibonacci.png" alt="piercing-line-fibonacci" width="494" height="444" class="aligncenter size-full wp-image-3472" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/piercing-line-fibonacci.png 494w, http://marketsurvival.net/wp-content/uploads/2018/08/piercing-line-fibonacci-300×270.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/piercing-line-fibonacci-67×60.png 67w" sizes="(max-width: 494px) 100vw, 494px" />
Bullish Engulfing pattern
A pattern similar to bearish engulfing. We look at two candles. First is bearish, the second one is bullish with a body bigger than the first candle. 
Again, you want to take it as a signal if this pattern is near important retracement line. You will see it a lot during a strong trend moves. If there is no important resistance line nearby, just ignore it.
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/bullish-engulfing-fibonacci.png" alt="bullish-engulfing-fibonacci" width="620" height="376" class="aligncenter size-full wp-image-3473" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/bullish-engulfing-fibonacci.png 620w, http://marketsurvival.net/wp-content/uploads/2018/08/bullish-engulfing-fibonacci-300×182.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/bullish-engulfing-fibonacci-99×60.png 99w" sizes="(max-width: 620px) 100vw, 620px" />
<h3>Price patterns – things to remember about</h3>
As I mentioned a few times before, we look for price pattern in specific conditions – during a correction. 
You will see these patterns a lot in different situations but that doesn’t mean that you should take action each time. 
That’s why it is important to identify trend first. If you identified the trend and you see that price is making higher highs then you know that you look for bullish candle patterns during a correction. You know that you should ignore these bullish patterns during a downtrend. 
Just like in the example below where we had a bullish engulfing pattern. The main trend was down so they should be ignored.
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/downtrend-price-pattern.png" alt="downtrend-price-pattern" width="445" height="320" class="aligncenter size-full wp-image-3474" srcset="http://marketsurvival.net/wp-content/uploads/2018/08/downtrend-price-pattern.png 445w, http://marketsurvival.net/wp-content/uploads/2018/08/downtrend-price-pattern-300×216.png 300w, http://marketsurvival.net/wp-content/uploads/2018/08/downtrend-price-pattern-83×60.png 83w" sizes="(max-width: 445px) 100vw, 445px" />
Another thing to remember about is trade management. You never know in advance if you selected the right direction to open a trade. To make things harder, on many times Fibonacci will work in both ways (I wrote about it in a different section). 
Let’s have a look at the example below. We selected AB swing and put our retracement lines on it. There was a correction to the 78.2% retracement line. Next, there was a bullish engulfing pattern, a good place to go long. So we did. Price went up a bit but there was some resistance (box marked on the chart). We can see in the box shooting star, later there was a bearish engulfing pattern. These were signals that there is some resistance in the place and reversal is possible. At least we should move our stop loss to the entry point because of these warning signs. 
In the end, this was a reversal for the price. The correct way to draw Fibonacci was the other way to look for short. We made a mistake but with good trade management, we protect our capital. 
<img src="http://marketsurvival.net/wp-content/uploads/2018/08/price-pattern-manageing-trade.png" alt="price-pattern-manageing-trade" width="458" height="348" class="aligncenter size-full wp-image-3475" srcset="http://marketsu

Swing trading strategies with Fibonacci tools

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