The market moves in waves: **Impulse** (Trend) and **Correction** (Pullback). The **Fibonacci Retracement** tool allows you to predict where the pullback will stop.
The key is the ratio **61.8% (0.618)**—the **"Golden Ratio"**. We use this to predict where institutional algorithms are waiting to reload their positions.
SVG 1: The Golden Zone (0.618) Retracement
1. Drawing Rules and Key Levels
**Drawing Rule:** Always draw from Left to Right, from the **Swing LOW** (0.0) to the **Swing HIGH** (1.0) for a bullish move, and vice versa for a bearish move.
The Golden Entry Zone (Risk Strategy)
We only look for Buy entries between the **0.618** and **0.786** levels.
- **0.618 (Golden Ratio):** The primary institutional sweet spot.
- **0.786 (Deep Discount):** The last stand before structural invalidation.
SVG 3: Premium vs. Discount Pricing Rule (Risk Avoidance)
2. The Convergence Strategy (Confluence)
**Fibonacci alone is not enough.** You need **"Confluence"** (multiple reasons to enter) to validate the Golden Zone and manage **Entry Risk**.
SVG 2: The Sniper Checklist (Entry Confluence)
3. Risk Management and Targets
Using Fibonacci makes placing your Stop Loss easy and maximizes your **Risk-to-Reward Ratio**.
- **Stop Loss:** Place it just below the **0.786** level or below the **Swing Low (1.0)** of the impulse move. This respects the structural invalidation point.
- **Take Profit 1:** The **0.0 Level** (Recent High).
- **Take Profit 2 (Extension):** The **-0.27 Extension** (The "Home Run" target).
Risk Quantification:
Always risk a fixed, small percentage (**1% to 2%**) of capital. Use the Lot Size Calculator to determine position size based on your structural Stop Loss. Verify your RR using the Risk & Reward Calculator.
Final Thoughts
The Fibonacci tool is your map to finding **value** and controlling **entry risk**. Add this to your chart today, and watch how price reacts to the **0.618 line** when aligned with **confluence**. Monitor the structural flow of the market via the Realtime Market Dashboard.
