Sheetal Rijhwani

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Why Price Bounces Where It Does- Welcome to the Fibonacci Zone!

A Quick and very important 🧵 on Fibonacci-

This thread is for every trader who’s tired of guessing levels.
Bookmark it. Share it. Let’s get smart together. 🔁 

2/
What is Fibonacci Retracement?

It’s a popular tool used by traders to identify potential support and resistance levels using key ratios derived from the Fibonacci sequence.

The most common levels:
🔹 23.6%
🔹 38.2%
🔹 50% (not a Fib number but widely used)
🔹 61.8%
🔹 78.6%

3/ These act like “zones” where the price may pause, reverse or bounce.

How to use it?

Identify a strong uptrend or downtrend

Draw Fibonacci from swing low to swing high (for uptrend) or high to low (for downtrend)

Watch how price reacts around the levels. Check examples - 

4/ Want to learn Fibonacci retracement with real chart examples?
I regularly share my market learnings, price action concepts, and trade setups on my Telegram channel - including videos on tools like Fibs.

https://telegram.me/LearnBetterwithSheetal/15179

5/ 📈 In an uptrend:

You're looking for the price to pull back and take support near 38.2%, 50%, or 61.8%
These are potential buy zones if the trend continues.

📉 In a downtrend:

You look for resistance at these levels for possible short entries. 

6/ When a stock or index retraces after a move, 50% and 61.8% are two of the most important levels to watch.

📌 50% isn’t technically a Fibonacci number, but it’s psychologically strong.. many traders expect half the move to be retraced.
📌 61.8% is the golden ratio. 

7/ These levels often act as strong support/resistance and reversals from here can lead to powerful moves.

Not magic. Just math + human behavior.

8/ Is That a Pullback or a Reversal? Fibonacci Has the Answer- 

What happens if it breaks below 61.8%?

That’s usually your cue that the retracement is turning into a deeper correction or even a full trend reversal.

61.8% is the “last line of defense” for bulls in an uptrend.

9/ If price breaks and closes below it with volume or momentum.. it’s often not just a pullback anymore.

 What to watch for next:

78.6% becomes the next key level.
📉 If even that doesn't hold, chances are the previous trend is done, and you’re in a new trend altogether. 

10/ In short:
Below 61.8% = caution. The odds shift from "pullback" to "possible reversal." Time to zoom out and reassess.

📈 In a downtrend
If price retraces up to 61.8% - that’s often the last strong resistance before sellers usually step back in.

11/ If price breaks above the 61.8%, it’s not a pullback anymore — the downtrend is likely weakening or reversing.

Bulls taking control.

Momentum shifting.

Shorts getting squeezed. 

12/ 📌 Summary for downtrend:

50% &amp; 61.8% retracement = key resistance zones

Above 61.8%? Pullback might turn into reversal.

Stay cautious on shorts if momentum shifts post-61.8%. Check example -

13/ Important Tips:

1. Combine with price action (candle patterns for entries and exits.)
2. Use along with volume or trend confirmation
3. Don’t blindly buy/sell on these levels – use them as areas of interest, not guaranteed zones.

14/ Quick Example:

If a stock moves from ₹100 to ₹150
Then pulls back...

🔹 23.6% = ₹138.2
🔹 38.2% = ₹130.9
🔹 50% = ₹125
🔹 61.8% = ₹119.1

You’d watch these levels for support.

Most important support zone - 119-125.

15/ Fibonacci retracement helps you plan better entries &amp; exits by finding where price might react. 

Great for pullback entries
Works in all timeframes
Combine with price action

Like and Repost and let me know if you want a thread on Fibonacci Extensions next! 👇

If you are a swing trader, this 🧵 is for you. 

There are three patterns that commonly form and can give you amazing buying opportunities in stocks after a big downtrend.

In this thread, you will find some great insights on price action. Bookmark it and read later. 💥 (1/18)

First, try to understand the overall trend of the market by following the small-cap index.

You can check my YouTube video on how to track the index for more information. (2/

https://youtu.be/eXTC_9yZTTs?si=D8nIXmldXClEn39b

Once you observe any recovery in the index after a downtrend, begin analyzing stock charts. Ensure you have a list of stock names ready. 

Join my telegram channel for regular price action learnings. I share short videos here - (3/

https://telegram.me/LearnBetterwithSheetal/14981

First Pattern - Descending Trendline 

What is a Descending Trendline? When the price forms lower highs and lower lows, you can connect the lower highs to draw a trendline. (4

There should be more than two touches. As long as the price remains below the trendline, the downtrend is considered solid and intact. This pattern typically begins to form when the index reaches a peak.

If it is touched multiple times, around 4-5 times.. (5/ 

..the trendline becomes weaker and eventually it is likely to break to the upside.

How to trade -Initiate a trade once it breaks to the upside. A break above the trendline indicates a trend reversal and you can consider taking a buying trade after the breakout. (6/ 

The price may attempt to give false breakouts once or twice. Generally, early breakouts from the trendlines are false.
and eventually, we may experience a genuine breakout. When this occurs, just do not miss the breakout under any cost. (7/

Now, how can we confirm the breakout?
When it breaks out of the descending trendline to the upside, there is typically an immediate resistance. If it fails to break immediate resistance after a trendline breakout, then it's a sign of a fake breakout. (8/ 

Volumes - When the stock is falling, the volume should be lower. When it breaks the trendline, the volume should increase in bullish candles. This increase in volume adds to the conviction of the breakout. This represents a proper trend reversal pattern. (9

Second Pattern - Forms a base at important support/accumulation- After a downtrend, the price takes a pause and starts consolidating near a support zone, forming a range. It can consolidate for a few days before reversing. The larger the consolidation, the stronger the breakout.

Sometimes, if the downtrend is very strong, there's a possibility that it will break to the downside. Therefore, it's crucial to wait for a proper breakout to the upside and to also track the index. (11/

Volume often decreases as the market consolidates, indicating accumulation and increases when it gives the breakout. 
Stop-Loss:
   - Place SL orders below the lower boundary of the accumulation zone to protect against false breakouts. (12/ 

Target:
 
Measure the height of the accumulation range and project it upwards from the breakout point to set a profit target. (13/

Third Pattern - Double Bottom

A double bottom is a bullish reversal chart pattern resembling a "W." It forms when a price hits two similar lows with a peak in between, indicating strong support. When the price breaks above the peak, it suggests a potential upward trend. (14/ 

Enter long positions when the price breaks above the middle peak or confirmation line of the double bottom.

Stop-Loss:
Place SL below the second bottom to limit potential losses if the pattern fails. (15/

Target: Measure the distance from the second bottom to the confirmation line and project it upwards from the breakout point.

General Tips
- Patience: Wait for confirmation of patterns before entering trades. (16/

Risk Management: Never risk more than a small percentage of your account on a single trade.

Backtesting: Test these strategies on historical data to build confidence.

Using these strategies with proper risk management can help you capitalize on potential market reversals. (17/

If you find this thread helpful, like and Repost the first post and follow me for regular learnings. 

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