BTC Deep Charts ((Part 5) (Fibonacci Extension + Setup))

Good morning everyone! I hope you are all doing well, enjoyed your weekend, and are gearing up for the next week in markets!

I apologize so much for last week. A lot of you messaged me and reacted to my posts about posting the charts, but I could not get around to writing an article. I will make up for that today! If you have been following me since I shifted my charting towards cryptocurrency, then you will know of my accuracy along the way.

Recap:

1. BTC all time high before April

2. BTC Rally begins in Mid - Late February

3. Bitcoin sentiment is overall bullish

4. Only people selling are Retail. Smart Money continues to buy / hold. How the tables turn when you have Million or Billion's of dollars in a position lol.

5. All of our found levels have acted as areas of support and resistance

6. We accurately found buyers and sellers in the market

7. Liquidity in Effecient and Uneffecient markets

8. I will take a position in Polygon as I believe it is the only "stable" alt-coin other than Solana.

9. We said all time highs would happen last week

10. Retracement expected at the highs

That is not everything, but a short and to the point list of predictions we followed along the way to the highs that all played out.

Alright, with that said, let's get into the charts.

Wow! That's a new and cluttered chart that tells me absolutely nothing.

If you thought that, then you would be right! It is a new chart, but it actually tells a lot.

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Introducing, the Fibonacci Extension Tool. This tool, or indicator, is based off of extensions to the upside, a retracement, then further upside.

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Let's get rid of them for a second and I will show you.

Your chart might, and probably, doesn't look like mine. What you see here are areas of liquidity, market sentiment, levels, and breakout patterns from previous articles.

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(I will post a TLDR at the bottom)

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1. What is important for you to do is first make sure you are on this chart:

2. I will be charting on the Weekly time frame, so if you are following along make sure to do the same.

3. In the Fibonacci toolbar, select "Trend-Based Fib Extension"

4. Once you have it selected, it's time to chart.

-Start by clicking on the lows. The candle where the extension began. We know it's a candle at the buyside liquidity down at $26,000 where the rally began.

-The next step is sort of hard to take a screen capture of, so I will just point out where I am going to click.

-Your chart should look something like this

The reason I chose those locations is based off how the tool works. We are charting possible significant levels with the Fibonacci Extension tool.

-Now drag out the graph on the X axis, but keep it where it is on the Y axis. So slide it to the right.

5. Once you have done all these steps, now you should have a chart which looks like this. But what does it mean?

Essentially, this is a tool for profit targets in Day Trading. But we can also use it to find areas of possible support or resistance. I have used the extension tool a lot when trading Futures. Of course it's not 100% accurate, but it can be helpful to chart where the market might go when there are no candles.

Let me give an example with candles.

If you compare it to our levels, it is pretty close!

The closer together the values are, the higher probability of a significant zone. Although that is hard to see from the Weekly chart, let's take a look at the Daily for more information.

Does it make more sense now? Look at the Fibonacci levels and compare it to the price action on the Daily candles.

If it is still not clear, let me highlight where we saw action relative to the Fibonacci levels.

As we travel up the graph, the stronger the BUYING volatility is, but less accurate the fib levels become due to increased volatility.

For example, we had STRONG volatility in this range.

It took 3 candles to explode straight to the highs. A lot of buying volatility and volume, but not a lot of accuracy from the levels. The only thing the tool tells us is that this area has a strong probability of a decent movement as a result of a possible increase of volatility between the level and the next one to the upside.

However, we saw that buying volatility decrease at the same level, and I bet you can guess what it looked like on the chart.

We saw sellers take the tape, but reject off / close to the Fibonacci levels.

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Don't get it twisted though, my levels up to this point were based off of previous levels from candles at the same price range. However, now that I know my levels from known prices are similar to the Fibinacci levels, I have a greater level of confidence that they will serve as areas of support and resistance, or in Day Trading terms, areas of possible selling and buying.

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But how did I know that the $72,000 range would be the next significant level? If it is all time high, how was I able to predict that we would see some movement close to the level if the Weekly Fibonnaci doesn't have it charted until $75,000?

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By creating another extension tool of course!

By creating another on a lower time frame, we can see a more accurate probability of significant levels relative to the current time frame. The Weekly Fibonacci is great for huge runs over a long period of time, but if we want to see more specific possible levels, we would use the tool on lower time frames.

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What I mean is, by magnifying in each larger extension, whether its the overall Weekly extension, or Daily extension, the smaller the time frame the more "specific" the levels become.

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In the Weekly Fibonacci, we had large areas of overall volatility / probable levels. With the Daily Fibonacci, we can see areas of more specific volatility / probable levels within the Weekly Fibonacci since Weeks are made out of Days. That is how the math and charting works.

Look at the price actions around the Daily, or shoter, time frame Fibonacci levels. We can see possible levels of exiting and entering from buyers and sellers (aka, support and resistance, aka supply and demand) at these levels from the previous extention within the overall Weekly Fibonacci tool.

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I bet you can guess where $72,000 is?

Not only that, but on the day we rejected off the next Daily Fibonacci level. Crazy right?

The Fibonacci levels are a great way to use mathematics to find probable areas of support and resistance. As a result, we now have some more possible levels to the upside where Bitcoin has never reached before.

The $74,900 level

The $80,500 level

The $93,600 level

The $97,500 level

Although there are more, I want to see us reach one of those levels and retrace again. Then the process will repeat with another Fibonacci Extension graph.

1. Fibonacci levels are a great way to gague possible areas of buying and selling, support and resistance, and supply and demand. Terms that all traders should be familiar with.

2. The Fibonacci Extension Tool is used to chart extensions to the upside, otherwise known as rallies.

3. Although these levels are mostly used within ranges of already realized levels, or known levels, we can also use them to help us find ranges where the price of a stock, or Bitcoin in this case, has never realized before.

4. The accuracy of these levels is never 100%. With that said, I used the default settings for this example, but I know you can change the charting configurations to make it even more accurate.

5. The larger time frame we chart, the less "specific", detailed, and probable the levels become. The shorter the time frame, the higher the "specific", detailed, and probable the levels become.

6. Since weeks are made of days, the math checks out where we might not see a lot of buying and selling volatility from the weekly, but more buying and selling activity on the daily. It would also increase the shorter the time frame because there are more candles on the chart.

7. The larger the distance from each Fibonacci level, the higher probable volatility, but lower probable accuracy. The shorter the distance from each Fibonacci level, the lower probable volatility, but higher probable accuracy.

8. You can combine the Fibonacci levels with your own charts to find areas where buyers or sellers might enter a position. By combining multiple indicators and tools you can take more educated positions in the market.

The RSI is not heavily overextended yet, so there may be more room to move to the upside. Buyers will need to close above the current level for more upside.

There is a rising wedge forming. Buyers will need to close above and reject the wedge from the downside with volume for more upside.

Thank you for reading! I hope this article was helpful and informative. The Fibonacci Extension Tool can be incredibly powerful whether if you are in a position looking to sell, or waiting for an entry point. Try it out yourself and see how it works with your stocks or crypto that you currently hold.

Current chart

At the time of writing, Bitcoin is around $72,360

Thank you for all the support. I hope everyone makes some cheddar and enjoys their day in the market