How To Use Fibonacci Retracement In TradingView – A Complete Guide

The Fibonacci retracement tool is one of the most popular indicators used by traders on all timeframes and markets. When combined with other analysis techniques, Fibonacci retracements can pinpoint high-probability trade locations and maximize profit.

In this comprehensive guide, we’ll explore how to use Fibonacci retracement in TradingView to identify key support and resistance levels accurately. Mastering Fibonacci will make you a better, more successful trader. Let’s get started!

How To Use Fibonacci Retracement In Tradingview

What is Fibonacci Retracement?

Fibonacci retracement refers to using horizontal support and resistance levels based on the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%. These levels aim to identify potential reversal points in trends and swings.

The indicator uses a price wave starting from a swing low up to a swing high to establish key levels. As the market retraces, certain Fib levels often coincide with significant support and resistance leading to bounces.

Understanding Fibonacci retracement allows traders to anticipate areas where swings and trends may reverse ahead of time with high accuracy.

Adding Fibonacci Retracement in TradingView

TradingView makes adding Fibonacci retracement easy across any chart:

  1. Select the Fibonacci Retracement tool from the left toolbar
  2. Click on a significant swing low on the chart
  3. Drag cursor to a subsequent swing high to complete the wave
  4. Levels at 23.6%, 38.2% etc will populate automatically
  5. Repeat on other swing waves as desired

With just a few clicks, we can define all the key Fibonacci levels to watch on any price chart.

How to Use Fibonacci Retracement Effectively

When added properly, Fibonacci retracement can highlight probabilities:

  • Support/Resistance – Look for bounces near key Fib levels, especially at 38.2%, 50% and 61.8%
  • Stop Loss – Often above 61.8% or below 38.2% levels outside of key zones
  • Profit Targets – Take partial profits at Fib levels when retracing in a profitable direction
  • Entry Triggers – Combine with candlestick patterns, indicators for high probability setups
  • Trend Trades – Enter on pullbacks to levels in the overarching trend direction

Learn to integrate Fib analysis into your overall trading plan and strategy for precision entries.

Tips for High Probability Setups Using Fib Retracements

Focus on price action context for the highest probability Fib trades:

Confluence – Look for clusters of Fib levels across multiple waves and timeframes lining up.

Volume – More significant reversals occur with increased buying/selling volume.

Candlestick Validation – Rejection/pin bars confirm Fib support/resistance.

Other Indicators – Momentum oscillator divergences make Fib levels stronger.

Range Context – Fade Fib extensions outside ranges. Trade pullbacks inside ranges.

Seeking confluence and confirmation gives you an edge and improves Fibonacci accuracy tremendously.

Common Fibonacci Retracement Levels

While all Fib levels have potential significance, some ratios have higher probabilities:

61.8% – The golden ratio is a highly significant retracement level in trends and swings. Watch for validation by other factors.

38.2% – Tied to 1.618 extension, the 38.2% level marks crucial support/resistance during retracements.

50% – As the halfway point, round number 50% level is psychologically significant for reversals.

When multiple factors confirm, the 38.2%, 50% and 61.8% levels provide extremely high-probability reversal points early in trends.

Fibonacci Retracement vs Extension

Beyond just retracements, Fib levels can also provide extension targets:

Retracements – Identify potential support/resistance during reactions against the trend.

Extensions – Project price targets in the direction of the overarching trend.

Use retracements to time entries in the major trend direction. Extensions designate take profit areas and trailing stops.

Combine retracements and extensions for complete trade management.

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Adjusting Fibonacci Settings on TradingView

TradingView allows customizing Fibonacci settings:

Levels – Choose which levels like 61.8%, 50% etc to enable individually.

Colors – Change colors of each Fib level for quick visual reference.

Style – Toggle between solid lines, dashed lines or dots for levels.

Width – Make levels thinner or thicker to stand out on the chart.

Adjust settings to align with your preferences and make key levels clearly visible on charts.

Using Fib Time Extensions on TradingView

In addition to price retracements, TradingView can plot Fibonacci time ratios on charts.

Time extensions project ahead in time based on prior dominant swings similar to Gann angles. This allows estimating potential turning points in the future.

Enable time extensions in Fib tool settings. Use to complement price analysis.

Combining Fibonacci with Other Indicators

For best results, use Fibonacci retracements alongside complementary indicators:

Moving Averages – Fib levels gain significance when aligned with moving averages.

Price Action – Candlestick patterns confirm bounce points at Fib levels.

Oscillators – Divergences with RSI/momentum indicate reversals.

Order Flow – Volume spikes at Fib levels validate as support/resistance.

Well-rounded technical analysis combining Fib ratios with other tools produces the highest probability setups.

Conclusion on Mastering Fibonacci in TradingView

Fibonacci retracement and extension levels reveal hidden structure in price charts illuminating significant support/resistance zones and ideal reversal points.

Integrating Fib analysis into your TradingView setup and combining with indicators, volume and price action creates a strategic advantage. But like any tool, skill and practice over time is required to effectively apply Fib ratios.

Make the commitment to truly master Fibonacci, and your trading results will reach new levels. The insights unlocked are well worth the dedication to learn this universal trading technique.

Author: Dominic Walsh

I am a highly regarded trader, author & coach with over 16 years of experience trading financial markets. Today I am recognized by many as a forex strategy developer. After starting blogging in 2014, I became one of the world's most widely followed forex trading coaches, with a monthly readership of more than 40,000 traders! Make sure to follow me on social media: Instagram | Facebook | Linkedin | Youtube| Twitter | Pinterest | Medium | Quora | Reddit | Telegram Channel

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