Fibonacci: The Golden Ratio
Over the years I've been immersed in the trading world, I've explored and tried just about everything. I've gone through indicators like the RSI, volume analysis, and even studied order flow in detail. There was a time when I decided to trade without candles, just looking at raw amounts and data - an interesting experiment, but I admit it wasn't my style. I tried almost every visual method out there to understand price behavior and market movements, from bar charts to simple lines, but in the end, I came back to the classic: Japanese candles. There's something about that representation that allows me to "feel" the market in a way that other methods don't.
However, beyond my preferred charting style, there is one tool that, in my opinion, surpasses all others: the Fibonacci. Now, to be clear, I know that it is not technically an indicator in the traditional sense, but that is precisely one of the reasons why I consider it superior. Fibonacci is a golden formulation, a mathematical representation that is found everywhere, not just in financial markets. From nature to architecture to art, the Fibonacci sequence is a universal pattern. And if something is universal, why wouldn’t it apply to trading as well?
When I first started, like most, I dove into charting. And I'm not going to lie, it helped me a lot on my initial journey; understanding patterns like triangles, flags, and head-and-shoulders was a solid foundation. But it was even more revealing when I discovered how to use those patterns "against" general market expectations. There I learned that in trading, what everyone sees rarely plays out the way they expect.
Over time, my trading became more sophisticated. I experimented with more advanced concepts like CHoCH (Change of Character), BOS (Break of Structure), and Fair Value Gaps (FVGs). Each of these elements brought something new to my strategy, helping me understand market structure and the psychology behind price movements. But, despite the utility I found in each tool, I always came back to Fibonacci.
Why? Because Fibonacci is that “ace up your sleeve” that rarely fails. Its levels, when plotted correctly, coincide with reaction zones in the market with astonishing accuracy. And here’s where I want to be honest: it doesn’t matter if you’re just starting out and still figuring out what a 50% retracement is or if you’re an experienced trader looking for entries at key points; Fibonacci is relevant at any level. If you’re a beginner, you probably won’t jump headfirst into order flow analysis or using advanced indicators. But Fibonacci is accessible and, best of all, functional right out of the box.
It may sound cliché, but in my years of trading, I’ve seen Fibonacci get it right more times than I can count. Its retracement and extension levels appear as natural support and resistance zones. It’s as if the market, in an act of unspoken respect, aligns itself with these levels. And not just on daily or 4-hour charts; I’ve seen it work on shorter time frames and even in scalping strategies.
I know it may seem like a stretch to say that “Fibonacci never fails,” but in my experience, it’s the closest thing to a foolproof tool. And what fascinates me is that its application is not limited to technical trading. If you look hard enough, you’ll see the Fibonacci imprint in the waves of the ocean, in the proportion of seashells, and in the distribution of leaves on a plant. So why not take advantage of something so inherently natural to trade?
In short, I have gone through many phases and tried many methods, from basic charting to more advanced concepts like Smart Money and order flow. But if I had to choose just one tool to rely on, it would be Fibonacci.
Because at the end of the day, what I'm looking for is a way to read the market as accurately as possible, and Fibonacci is, without a doubt, my go-to tool. If you're just starting out in the world of trading or even if you've been trading for years, consider giving Fibonacci a try. You don't need to be an expert to start using it, but I can guarantee that the more you use it, the more you'll realize its relevance to market behavior. It's like discovering the skeleton behind price movement; levels don't just appear out of nowhere, they have a logic that, when you understand it, gives you a strategic advantage.
If I could give one piece of advice based on my years of experience and all the trial, error, and learning I've had, I would say: don't underestimate the simplicity of what seems basic. Fibonacci may seem like just another tool, just another line on your charts, but the reality is that it's a representation of something much deeper. It's not just a number or a percentage, it's a reflection of the natural structure and the way the market moves.
So, if you are looking to improve your trading or simply explore new tools, then you should definitely incorporate Fibonacci analysis into your arsenal. At first it may seem like just a set of levels, but with time and practice, you will understand why many traders, including myself, consider it the cornerstone of their trading. As I like to say, “the market may fool you once, but Fibonacci will show you where the cards are really playing.” And believe me, in trading, having those kinds of insights is worth its weight in gold. Thanks for reading and #let’stalktrading
