Fibonacci Trading Strategy: Combining Technicals for High-Probability Setups

Jasper Osita - Market Analyst

2025-07-10 12:03:09

Goal of This Lesson

To teach you how to stack Fibonacci retracement levels, support/resistance zones, moving average filters, and price action signals—then exit with clean precision using Fibonacci extensions.

This creates a complete, high-probability trading strategy that works in forex, indices, crypto, and commodities.

Quick Review: Fibonacci Trading Series So Far

Before we dive into today's strategy, here’s a quick recap of what you’ve learned in previous parts of this Fibonacci Trading Series:

Beginner’s Guide to Fibonacci Trading: Introduced key ratios (0.382, 0.5, 0.618, 0.786), how to plot retracements, and when to apply Fibonacci tools for pullbacks or continuations.

Fibonacci Confluence & Confirmation Strategy: Taught how to use Fibonacci levels with a stack of trade confluences across timeframes and how confirmation (e.g., structure break) builds confidence.

Multi-Timeframe Confluence Strategy: Showed how aligning Fibonacci levels across multiple timeframes boosts entry precision and trend validation.

Trading the Golden Ratios: Explained how to identify the highest probability Fibonacci levels (0.618 retracement, 1.618 extension) and use them as reaction or continuation zones. Note: They are high probable due to confluences.

How to Use Fibonacci Extensions for Targets: Covered how to plot the Fibonacci Extension tool for projecting future price targets and placing stop losses beyond logical retracement points.

Now, in this new section, we combine all of that and add a key missing piece: price action and trend filters using support and resistance levels, along with moving averages, for maximum confluence and clarity.

Why Add Price Action & Moving Averages?

Fibonacci is not magic—but it’s powerful when combined with context.

Fibonacci provides the structure for where price may pull back or extend
Support and resistance give you levels where institutions may be interested
The moving average acts as your compass and another support & resistance layer
Price action provides the real-time trigger for when to enter the trade

When all four align, your odds of success multiply.

The Full Fibonacci Trading Strategy Breakdown

1. Trend Filter: Add a Moving Average

Use either:

50 EMA (faster trend)
100 SMA (slower trend)

Rules:

Price above MA → look for longs
Price below MA → look for shorts

This helps you avoid fighting momentum.

2. Plot the Fibonacci Retracement

Identify the latest impulse leg (A to B)
Plot the retracement from swing low to high (for longs) or high to low (for shorts)
Key pullback zones: 0.5, 0.618, 0.786

3. Mark Support/Resistance Levels

Check historical reaction areas on the left
Is the Fib level overlapping a previous resistance-turned-support or liquidity sweep?
This makes the level more meaningful
Align the S/R levels with the Moving Average

4. Wait for Price Action Confirmation

At the confluence zone (Fib + S/R + MA):

Look for a reversal signal on the Lower Timeframe:
- Bullish/bearish engulfing
- Pin bar
- LTF range breakout

5. Use Fibonacci Extension for Take-Profit

Switch to Fibonacci Extension Tool:

A = Start of impulse
B = End of impulse
C = End of retracement

Your take-profits:

1.272 – short-term target
1.618 – trend continuation target
2.0 – extended move or swing play

Common Mistakes to Avoid

Blindly trading Fib levels without context
Ignoring trend direction (never counter-trade a strong EMA trend)
Entering too early (wait for a clean signal)
Misplacing your Fibonacci A–B–C points

Quick Entry Checklist

Price aligned with the MA trend?
Fib retracement at 0.5–0.786?
Overlap with support/resistance + moving averages?
Clear reversal pattern or structure break on lower timeframe?
Extension tool plotted for TP?

If all checks out → Take the trade.

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This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

Autor

Jasper has been in the markets since 2019 trading currencies, indices and commodities like Gold. His approach in the market is heavily accompanied by technical analysis and of course, supported by fundamentals. He has a background in trading proprietary firms and has been teaching students how to navigate themselves in the markets from basic to advance concepts.

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Fibonacci Trading Strategy: Combining Technicals for High-Probability Setups

Goal of This Lesson

Quick Review: Fibonacci Trading Series So Far

Why Add Price Action & Moving Averages?

The Full Fibonacci Trading Strategy Breakdown

1. Trend Filter: Add a Moving Average

2. Plot the Fibonacci Retracement

3. Mark Support/Resistance Levels

4. Wait for Price Action Confirmation

5. Use Fibonacci Extension for Take-Profit

Common Mistakes to Avoid

Quick Entry Checklist

Start Practicing with Confidence — Risk-Free!

Check Out My Contents:

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