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Fibonacci Retracement Strategy: AMAZING way to trade with the MACD - YouTube
Channel: Prophet Market
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today we'll be going over Fibonacci
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retracements and at the very end we're
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going to talk about how to trade these
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with the MACD so here's an overview
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first we're going to go over what the
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Fibonacci sequence is then we're going
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to cover how to draw the Fibonacci lines
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next we'll go into how to trade them
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with price action and then finally we'll
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close up with how to trade them with the
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MACD a little bit of history first the
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Fibonacci sequence is a mathematical
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sequence in which every number after the
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first two is the sum of the two
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preceding ones it's a little bit
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confusing so here are some examples as
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you can see here are some examples 0 1 1
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2 3 5 8 13 21 34 and so on if you take
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the numbers 1 and 1 and add them
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together you'll get 2 you take the next
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two numbers in the sequence 1 and 2 add
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those you'll get 3 the next two numbers
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in the sequence are 2 and 3 add those
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you'll get 5 so on and so forth
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Fibonacci lines are used as a
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retracement calculator in any market the
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percentage of the retracement provides
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support and resistance areas for the
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current price action the most important
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of these levels is the 0.618 level
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although the point 5 0 0 area also
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offers very strong support even though
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it's not a technically a fibonacci
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percentage we still use this in our
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trading so let's take a look at how to
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draw these lines we're looking at the
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Apple daily chart from 12 3 18 to 7 25
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19 and this is an example for an up move
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step one is to locate a recent extreme
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low that's marked in yellow here step
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two is to locate a recent extreme high
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that'll be in teal step 3 connect the
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recent extreme low to the recent extreme
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high with the Fibonacci retracement tool
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now these Fibonacci retracement tools
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should be found in any standard charting
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platform when you connect the extreme
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load to the extreme high the Fibonacci
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lines will automatically draw I've
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highlighted the point 6 1 8 and the
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point 5 0 0 areas just so that you can
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see them better there in teal
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if you like the content please consider
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subscribing it really helps us it's a
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stay motivated to create content like
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this and to continue to try to educate
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traders all right so let's cover a down
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move and how to draw you know Fibonacci
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retracement lines for a Down move here
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we're looking at the USO daily chart and
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the dates are available here's a down
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move so in step one its opposite of what
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we did for the up move we're gonna
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locate a recent extreme high first that
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again is in yellow here step 2 is to
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locate a recent extreme low that will be
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in teal next we'll connect those will
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connect the recent extreme high to the
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recent extreme low with the Fibonacci
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retracement tool I've already done that
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here and I've shown these lines already
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drawn okay so let's go into how to
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actually trade this let's incorporate
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some price action and come up with the
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strategy alright so going back to the
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same Apple daily chart step 1 let's
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locate a series of recent higher lows
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essentially what we're doing here is
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making sure that we verify an uptrend so
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here's a low and here's a low as
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delineated by the white horizontal lines
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as you can see this is an uptrend step
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to draw the Fibonacci lines on the most
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recent move up this is exactly what we
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did a few slides back alright here are
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the lines I'm gonna remove a couple just
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so just to make room for some more text
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step 3
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wait on the downside move to retrace
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back to either the point five zero zero
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or the point six one eight levels
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without closing below them if you look
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at the pink line you can see that that
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red candle came down the wick touched
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the point six one eight area but did not
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break through it step four look for a
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red candle followed by a green candle
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make sure that the green candle closes
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above the open of the red candle I don't
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want you to be confused by that make
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sure the green candle closes above the
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open of the red candle that is seen
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right here we're gonna go ahead and zoom
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into this just so I can explain this a
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little bit further alright we're just
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zoomed into that price action so we've
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come down and we tested the point six
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eight line here's the red candle open
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and here's the red candle close here's
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the following green candle open and the
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green candle closed what we want to see
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is that the green candle close is
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greater than the red candle open let's
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go back over that again there's the red
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candle open the red candle close the
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green candle open in the green candle
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close what we want to see is that the
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green candle close is greater than the
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red candle open after testing but not
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breaking either the point five zero zero
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line with the point six one eight line
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in this case it was the point six one
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eight line all right now on to how to
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trade this with the MACD indicator I've
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already drawn the lines here on the same
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Apple example this is an upside move and
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the dates were previously shown on
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previous slides let's go back and
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incorporate some price action and go
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back through those steps just to review
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so step one let's locate a series of
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recent higher lows and an uptrend
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we've done that step two let's draw the
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Fibonacci lines on the most recent move
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up we've done that step three wait on
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the downside move to retrace back to
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either the point five zero zero or the
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point six one eight levels without
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closing below them all right we have
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that
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step four look for a red candle followed
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by a green candle in the price action
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make sure the green candle closes above
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the open of the red candle alright we've
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already demonstrated that as well now
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we're going to add step five for the
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MACD step five
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verify that the MACD has crossed over
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and the negative histogram has turned
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positive that is seen right here on this
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chart we're gonna zoom into this just to
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show you a little bit more clearly
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alright so here's a zoomed in view sorry
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if it's a little bit pixelated of the
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MACD this is a MACD cross up okay see
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the yellow line crossing the T line in
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this example next we have a negative
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histogram turning positive go over that
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one more time I'm gonna verify after
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we've done all the previous things with
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the Fibonacci retracement verify that
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the MACD is crossing up and that the
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negative histogram has turned
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positive noticed that this is happening
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at the same time that we see the green
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candle closing higher than the open of
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the red candle above in the price action
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so we have an uptrend we have a
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Fibonacci retracement test to the 0.618
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area and then we have a green candle
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closing higher than the open of the
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previous red candle now we look below
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for step 5 and we verify that the MACD
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is crossed over and the negative
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histogram has turned positive we have a
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MACD crossing upwards and a negative
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histogram turn and negative histogram
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turning positive this is what we want to
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see when trading the Fibonacci
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retracements with the MACD hope you
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enjoyed this video please consider
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watching a couple of our other videos
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and don't forget to subscribe
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