Finally, A Powerful Fibonacci Trading Strategy

Introduction

Navin, The Rubberband Man, and Fibonacci - Apart from being extremely handsome, what do they have in common?

They are all going to help with the following trading strategy based on Fibonacci Retracements. For years the internet has produced countless strategies around Fibonacci's fascinating numbers but for me unfortunately, they were always a hit and miss. Sometimes they would work to perfection while other times they would just simply fail. Until I learned about the Rubberband Man from Navin in his Mastering Price Action Course. After bugging him for a while about some insights on using Fibonacci Retracements, he shared this trading strategy!

The Fibonacci Retracement Strategy

For those of you who are already Mastering Price Action students, you already know who The Rubberband Man is, as if he was your next door neighbour. (Actually, come to think of it, I still don't know who my neighbour is, I should go say hi). But for the rest of you, you will soon find out how powerful his methods are! And no, he is not the 5th Teenage Ninja Turtle as you see mentioned in the webinar video :)

A Little Background on the Genius

Fibonacci was considered to be the most talented mathematician of the middle ages. So talented that even to this day his laws are still being followed in all walks of life including trading.

Fibonacci retracements tells us that the market is probably going to bounce between these mathematical ratios: 23.6%, 38.2%, 50%, 61.8% (golden ratio).

This leads us to one of the main issues encountered with using Fibonacci?

Common Problems

“Which ratio do I choose?” or “Where do I begin?”

Take the two graphs below as an example:

Looking at the Fibonacci retracement from the above swing high and swing low we can see that at the red arrow there is an almost perfect touch of 32.8%.

But now see what happens below when we move the swing high a little.

When we move the swing high we can see that it's working great at 50%. Before it was working at 38.2%... so which are we supposed to look at? 38% or 50%?

To help you with this it's time to bring back Rubberband Man!

Rubberband Man to the Rescue!

The Rubberband Man has a rubber band around his waist which pulls him back (Yes, that's how he got his name).

So imagine The Rubberband Man running up the hill and then he reaches point A, his highest point (so far), and then he takes a rest. The question to ask is how does he rest for? How much did he run vs how much did he rest? 

He starts running again, beats his previous record and rests at point B. How about this time? How much did he rest compared to how much he ran this time? Maybe 70%, resting a lot.

Then he runs again, all the way to point C. He still has energy. What if this is a 61.8% on the Fibonacci, can we say it's a sell right now??? No, it's too early to take that risk, the market is telling us that the Rubberband man is still running, he still has power.

Then he rests again, runs up again...But he can’t beat his previous record set at point C… After his latest burst his rest gets larger, he’s done, he’s too tired. Using this analogy we can measure the strength of the market move also known as momentum but looking at it in this analogy did wonders for me! 

What we want to see is the Fibonacci levels being respected and The Rubberband Man showing us that he is failing to go any further. Now we're measuring Price together with the mathematical sequence of Fibonacci. 

Now, the questions like : “Which ratio do I choose?” or “Where do I begin?” have less baggage over me. As I can go about my trading with a bit more confidence. 

Want More Examples?

Watch Navin show examples of this on real charts at 18.20 to 45.00 of the Webinar. He clearly shows where the ratios are fails, where the Rubberband Man tries to fool us with a fake run and how to identify where his actual run begins.

Let me know in the comments below if this has improved your performance 10 fold! I also look forward to seeing you in the next Live Webinar!

With Pip Love,
Garry