This article has been translated from English to Gen Z Slang.
Yo, if you’ve been staying woke during lessons, you´d totally know already that you can mash this dope Fibonacci retracement tool with support and resistance levels, and trend lines for a super lit trading strategy.
But hang tight, ‘cause we ain't done yet!
In this sesh, we’re gonna teach you how to vibe with the Fibonacci tool using your Japanese candlestick patterns knowledge from back in Grade 2.When you flex the Fibonacci tool with candlestick patterns, you're looking for those exhaustive candlesticks.
When you can spot when buying or selling energy is tapped out, it’s like finding out when the price might keep trending.
Here at BabyPips.com, we call these bad boys “Fibonacci Candlesticks,” or “Fib Sticks” for short. Kinda catchy, right? Let's peep an example to see what’s up.Check out this 1-hour chart of EUR/USD.
The pair seemed to have been in a downtrend this past week but decided to take a lil pause.
Is there gonna be a shot to hop onto this downtrend? You know the drill. Time to grab that Fibonacci retracement tool and get grinding!
As you can see from the chart fam, we set our Swing High at 1.3364 on March 3, and the Swing Low at 1.2523 on March 6.
Being a Friday, you chilled a bit, took an early day, and planned to make your next move when you see the charts post-weekend.
Whoa! By the time you crack open the charts, you see that EUR/USD has popped off from its Friday closing price.
While the 50.0% Fib level held up for a bit, buyers eventually skyrocketed the pair. You decide to chill and see if that 61.8% Fib level stays strong.
After all, the last candle was giga-bullish! Who knows, maybe the price keep blasting up!
Well, look at this! A long-legged doji just popped up legit right on the 61.8% Fibonacci retracement level.
If you've clocked Grade 2 right, you'd know that this is an “exhaustive candle.”Has the buying hype fizzled out? Is resistance hanging out at the Fibonacci retracement level?
Quite possibly. Other traders are probably giving that Fib level the side-eye too.
Is it go time to short? You never really know for sure (and that’s why keeping your risk in check is crucial), but the odds of a reversal seem pretty sweet!
If you had shorted right when that doji made an appearance, you could've raked in the bag.
Right after the doji, the price took a chill pill before heading straight south. Peep all the red candles!
Seems the buyers were absolutely knackered, letting the sellers take charge again.
Eventually, the price did a full send back to the Swing Low. That’s a thicc move of about 500 pips! Could’ve been your mega trade of the year!Spotting these “Fib Sticks” can be clutch, as they can give you the 411 on whether a Fibonacci retracement level is gonna be solid.
If it looks like the price is stalling out on a Fib level, chances are other traders have queued some orders there too.
This acts like extra sauce confirming some legit resistance or support at that price tag.
One cool thing about Fib Sticks is not needing to drop limit orders right on the Fib levels.
You might be stressing if the support or resistance holds ‘cause it is more of a “zone” not just pinpoint levels.
This is where unleashing your candlestick formation knowledge is pure gold.
You could camp for a Fib Stick to fire up, right under or above a Fibonacci retracement level, to get that extra assurance about entering the game.
If a Fib Stick forms, just go wild; enter the trade at the market price ‘cause you now got that more-needed assurance that level is holding strong.