Pullback Trading Strategy Using Moving Averages + Fibonacci

Jasper Osita - Market Analyst

2025-07-24 09:45:34

Goal of This Lesson

To help traders catch trend pullbacks with higher accuracy by combining Fibonacci retracement levels and moving averages (20 EMA & 50 SMA) for entry zones, stop placements, and trade confirmation.

Why This Pullback Strategy Works

Pullbacks offer low-risk, high-reward entries — if you catch them in the right spot.

That’s where the Fibonacci + Moving Average combo comes in:

Tool	Purpose	Strength
Fibonacci Retracement	Measures potential pullback zones	Psychology-backed price levels
20 EMA / 50 SMA	Dynamic support/resistance in trends	Confirms market bias & momentum

When both tools overlap, they create high-probability confluence zones.

Strategy Overview: Pullback Entry Using Fib + MA

Step 1: Confirm the Trend

Use MAs to confirm the market is trending:

50 SMA → overall trend
20 EMA → short-term momentum
Price above both = bullish
Price below both = bearish

Flat or tangled MAs = skip. Only trade trending conditions.

Step 2: Identify a Swing & Draw the Fibonacci

In a bullish trend: Swing Low → Swing High
In a bearish trend: Swing High → Swing Low
Focus on:
- 38.2% to 50% = shallow pullback (strong trend)
- 61.8% to 78.6% = deep pullback (trend reset)

To learn more about Fibonacci, check this out:

Mastering Fibonacci Trading Psychology – Trusting the Levels, Managing the Mind

Step 3: Look for Confluence Zones

Check if any key Fib level aligns with the 20 EMA or 50 SMA:

Fib Level	MA Confluence	Interpretation
38.2%–50%	20 EMA	Quick pullback → aggressive entry
61.8%–78.6%	50 SMA	Deeper pullback → conservative swing entry

Bonus: If the Fib + MA confluence aligns with:

Order block
Fair Value Gap
Support/Resistance

It’s now a high-probability pullback zone.

Step 4: Wait for Price Action Trigger at the Lower Timeframe

Don’t enter blindly. Wait for price to confirm direction at the zone.

You could use multi-timeframe analysis for accuracy.

Examples of entry triggers:

Bullish/bearish engulfing candle
Wick rejection with strong close
Liquidity sweep + reaction from MA or Fib

Only enter when structure confirms — price action is your real-time indicator.

Pro-Tip: Wait for a LTF Breakout.

Stop Loss & Trade Management

Entry Style	Stop Placement
Shallow pullback (20 EMA)	Below entry wick or recent swing low/high or range
Deep pullback (50 SMA)	Below swing structure or Fib 78.6%
Aggressive entry	Tight below trigger candle or OB

Suggested Take Profits:

TP1 = Previous high/low
TP2 = Fibonacci Extension 1.272 or 1.618 from the leg

When NOT to Use This Strategy

Sideways or range-bound markets
Before major news events
When MAs are flat or overlapping

Only trade this in clean, directional trends.

Real-Life Analogy: Pullbacks Are Like a Bouncing Ball

Imagine dropping a ball.

It bounces off the ground.
The height of each bounce depends on the strength of the drop and the surface it hits.

In trading:

Price = the ball
Moving Averages = the floor — dynamic support or resistance zones
Fibonacci = where you expect it might bounce (38.2%, 50%, 61.8%)
Price Action = the moment the ball starts rising again (your entry cue)

So when price pulls back into a moving average and a Fib level — just like a ball hitting the ground — you're watching to see if it bounces.

If it does (with confirmation), that’s your chance to jump in and ride the next move.

Final Thought

The best pullbacks are not guesses — they’re planned reactions to known areas.

With this strategy:

Fibonacci marks the zone
Moving Averages confirm the trend
Price Action gives the trigger

You’re no longer reacting. You’re anticipating — and that’s what turns a trader into a strategist.

Want to start using this strategy?

Pick one trending pair
Plot Fib + 20 EMA + 50 SMA
Wait for price to pull back into a confluence zone
Enter only on confirmation

Want to go further? Combine this setup with your trader profile to fit your rhythm: Discovering Your Trader Profile

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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.

Auteur

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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Prijzen zijn slechts indicatief

Pullback Trading Strategy Using Moving Averages + Fibonacci

Goal of This Lesson

Why This Pullback Strategy Works

Strategy Overview: Pullback Entry Using Fib + MA

Step 1: Confirm the Trend

Step 2: Identify a Swing & Draw the Fibonacci

Step 3: Look for Confluence Zones

Step 4: Wait for Price Action Trigger at the Lower Timeframe

Stop Loss & Trade Management

When NOT to Use This Strategy

Real-Life Analogy: Pullbacks Are Like a Bouncing Ball

Final Thought

Want to start using this strategy?

Start Practicing with Confidence - Risk-Free!

Check Out My Contents:

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