Fibonacci trading and cryptocurrency (Bitcoin and other)
Fibonacci trading works on every time frame an instrument. It can be a great addition to trade it on bitcoin.
Finding a broker for Bitcoin trading
There are few brokers with Bitcoin and other crypto coins in their offer. For example, even XM added it to their offer.
My recommendation would be a crypto account from FX Open:
You can open an account with a small deposit (starts from 10$), you have Metatrader 4 platform and cryptocurrencies offer is good.
Find all details here.
Fibonacci trading works on every time frame but for most traders, it is better to trade on the higher time frame. Especially when you trade Bitcoin or another crypto. Trends are strong here and you can catch bigger moves on higher time frames. Few examples below.
The 4-hour time frame of Bitcoin and simple ABCD trade:
The daily time frame of Bitcoin:
The weekly time frame of Bitcoin:
As you can see, on every one of them you can use Fibonacci to catch big moves.
Of course, Fibonacci works also on lower time frames, even when you trade Bitcoin. Example of 1-minute Bitcoin time frame:
You can see that it works great even on time frame as low as 1-minute. Read more about day trading bitcoin here.
You can use standard retracement lines:
We use them to spot ABC moves:
When it comes to extensions, you can use more lines. I stick to most basic ones:
- 127% extension
- 138.2% extension
- 161.8% extension
- 200% extension
- 261.8% extension
Just like on the chart below:
Fibonacci trading strategies for Bitcoin
You can use all strategies described in this guide. There is one thing to consider when you chose a trading strategy. Bitcoin is trending a lot. Because of that, you can combine Fibonacci tools with some trend following strategies like trailing stop loss or moving averages.
Trailing stop loss, Fibonacci, and Bitcoin
The plan can be like this:
- you trade with ABCD pattern
- when a price goes near your target (extension line) you close part of a trade (take profit)
- move stop loss higher
- let the rest of trade run with a trend
Like in the example below:
If you decided to trade on lower time frames (1h and lower) then it is a good idea to combine Fibonacci with Pivot lines. Below you can see how daily Pivot lines and extension lines helped to select the best exit point:
More about trading with pivot points here.
Ichimoku, Fibonacci, and Bitcoin
Ichimoku works best in trending condition. Bitcoin is trending so it is a nice combination of Fibonacci and Ichimoku. You use Ichimoku as a trend indicator. When you see – like below – that trend is up, you look for proper ABCD setup:
You can also use Ichimoku as a signal to enter or exit a trade. For example, a classic break from the cloud would be a good signal:
More about trading Ichimoku here.
Trading Bitcoin is not that different than normal trading. You can see that on Metatrader chart it looks similar to other trading pairs. You can use the same tools. Just be careful when you trade on lower time frames. For most traders, it should be better to trade longer ones.