Fibonacci Retracements Explained (NVDA, ORCL, AMD, SpaceX)

This is the trading playbook where the
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makes you a better trader.
Hello everyone and welcome to the
trading playbook. My name is Lenhow here
with verified investing and happy happy
Saturday everyone. Hope you guys are
doing well, having a great day. Um, in
today's episode, we're going to talk
about something very, very interesting
that honestly I didn't believe for a
long time. Um, but it is actually an
incredible
um, [clears throat] incredible thing
that happens all throughout different
trading and in nature itself. And that
is the play.
And the play is Fibonacci and Fibonacci
retraces. So a Fibonacci retrace or a
fib, right? Fibonacci extension is kind
of a pattern that happens all throughout
nature and within uh trading, right?
It's a pattern that we see everywhere.
Um and it's a mathematical
mathematical pattern that's quite
interesting, right? For the uses of our
trading, right? for the uses of our
trading. We use it to kind of find out
where things might find support or
resistance on a retrace. Now, what does
that mean? Well, we know about trend
line retraces, right? We know that, hey,
you come back down and you retrace, you
expect
some sort of resistance there.
Come down, run into resistance, right?
That would be a retrace, right? But what
if you have a larger, more extended move
like this one? How do you find
a level to potentially reshort it? Where
are you looking for resistance?
And what you use here is this cool this
tool here, excuse me, called the fib
retracement tool. And how you use it is
you basically take a point from the high
or the low, right? You can do either.
And drag it to the lowest point. in this
case right here and you're looking for a
retrace. Now what does that mean? That
means after the move has completed where
did it come back and run into resistance
and each of these numbers here the 236
382.5
618 786 8886 and basically the full
retrace right the more you retrace the
more powerful you're expecting kind of
resistance right and in simpler terms
you can think of the 0.5 as it has come
back up 50% of that drop, right? And you
can use this in almost any chart. And
you can see how it worked at least here
in Nvidia after coming down, pushing
back up. You can see where did it first
chop around and find resistance right
here at the 382. And where did it have
larger resistance? right here around the
0.5 fib pulling back. Here's 7%.
And here
over 11%
from that region, right? And you can see
now Nvidia is pushing up towards the 618
fib. But after these two retraces,
you're expecting these levels of
previous resistance to be weaker, right?
To not have as much strength, right? So
you can try drawing this at home. Let's
do Oracle, right? Looking at Oracle,
thinking about
how would you draw your fib. Go ahead
and pause your screen, open up your
trading view, and try and draw your fib.
And again, you're taking a point from
the very top to the very bottom here.
And what do you see? A beautiful
set of fib levels. And in this case, you
can see that Oracle stalling out,
finding resistance right here at the
236,
right? Additionally, it's a previous
pivot high, right? So, you can kind of
add your levels together, right? But
that brings me to the next rule of fib
retracements and playing these levels.
FIBs are not always, right? They're not
always solid levels that are you're
expecting pull back to the penny, right?
It often, you know, it often pierces and
goes above that, right? So, think of
FIBS as rather than, you know, a solid
line. It has to pull back here. It's
like you're expecting it to potentially
pierce and then fall. You see here, it
pierced it and then decided to fall.
Pierced again, then decided to fall.
Same thing with Oracle. pushed up into
it and then you're seeing some level of
resistance there.
All right, the next chart that I'm going
to talk a little bit about is AMD. And I
might have spoiled it a little bit, but
can you draw the fib on this on this
fall?
Well, first off, right, if you take a
look here, you can draw it in a couple
places. First off, if you would just
want to do this smaller move right from
its highs, you see that hey, it pulled
back and retraced to the 786 right here
and then ultimately fell. It found
resistance here at the 0.5 fib. And if
we draw the fib a little, take it all
the way down to this one. Where did it
go? Pushed back up. Pulled back at the
50% fib retrace. Pulled back at the 618
as well. and off of the 0.5 fib fell 10%
off of the 618 fell again. But just like
I said previously guys, what did it do?
It pushed up and it pierced it, right?
And then it pierced out. The last stock
I'm going to do, and we'll do this one
together in real time here,
is going to be SpaceX. Looking here at
SpaceX, we see this big huge vertical
fall.
Well, where do you expect resistance?
Right? Where are you anticipating
resistance? Well, it gives you the
levels very clearly for you. 236 382.5
fib. But what if we draw a fib from
right here, the recent high? Then you
take a look and say, "Wow, it almost got
to the 382 and pierced that 236 before
retracing and falling over 10%.
almost coming back to a um
right to the lowest point,
right? So, I hope that made sense, guys.
Um it's a little bit of a it's not a
trade that I would take off of this
singular factor, but it's important to
note, guys, that all of these things
that I'm teaching you, everything that
you're learning here from the trading
playbook is just another tool in your
tool bag, right? Whether it's a fib,
whether it's a head and shoulders
pattern, whether it's a bull or bare
flag, whether it's a pivot psychological
level, they're not supposed to be the
only things you use. But when you have,
you know, a pivot high that lines up
with a beautiful head and shoulders
pattern, which lines up with a fib
retrace, you know, then you start
getting multifactor trades. And think of
it as for every single factor that you
have in there, gap fill. You know,
another thing, the probability of your
trade playing out goes up. All right,
with that being said, guys, that's all I
have for you today. Thank you so much
for watching. Again, my name is Lo here
with Verified Investing. Before I let
you go, I just want you to know that
Gareth and I launched the Milliondoll
Long-Term Investor. Um, it's a service
created to focus on long-term investing.
If you want to learn more about what
Gareth and I made, go check out the
verifiedinvesting.com website and check
out long-term investing. I hope you have
a great rest of your day and I'll see
you tomorrow. Bye guys.
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