The fifty percent Fibonacci (50% Fibonacci)
The fifty percent Fibonacci retracement is a psychological price level that divides the price-action into two zones. The bullish zone is above, but bearish zone below it. Though, fifty is not a real Fibonacci number like 38.2 or 61.8, technical Fibonacci traders do rely on it. The position of the 50% Fibonacci retracement makes it a very interesting retracement to Fibonacci traders who are looking for a middle ground between the 38.2% and 61.8% Fibonacci retracements.
Therefore, there is a frenzy trading activity around the fifty percent Fibonacci retracements as most Fibonacci traders converge into that zone. Though great trading opportunities do occur around that Fibonacci retracement zone, many Fibonacci traders often lose their shirts just because they are rushing into a trade.
One should stay calm, but at the same time be ready to participate in any high probability trading setup that may occur.
As always, one must follow the trading drill.
Practical Use Of The 50% Fibonacci Retracements
1/ To find bullish or bearish financial instruments.
Generally, bullish stocks will display a bullish chart pattern or signal above the fifty percent Fibonacci level. On the other hand bearish securities will exhibit bearish chart patterns below the 50% Fibonacci key level.
2/ Combine it with the zigzag pattern.
A bullish zigzag pattern is in place after a bullish trend if it is a pull back or correction that ends at 50% Fibonacci retracement of that bullish trend.
On the other hand, one has a bearish trading setup if the zigzag pattern is a rally that retests the 50% Fibonacci retracement of the prior bearish trend.
3/ Combining the 50% Fibonacci retracement with bullish or bearish chart patterns.
Look for bullish chart patterns that are formed in the zone of the fifty percent
Fibonacci retracement level after a pull back.
Check bearish chart patterns in the same zone after a rally.
4/ Fibonacci Sweet Spot Zone And 50% Fibonacci
For more information about Fibonacci Fibonacci sweet spot zone trading check out the link below.
Combining 50% Fibonacci retracement with a higher low above it or lower high below it.
One is looking for the first higher low as soon as the price goes back above the 50% Fibonacci level.
On the other hand, one will trade the first lower high below the 50% level.
6/ Consolidation at 50% Fibonacci level.
A swing trader can take advantage of the consolidation around the fifty percent Fibonacci retracements level. In that case, one ought to be alert because a breakout can occur after few oscillations.
The consolidation around the fifty percent Fibonacci is frequent as the price is acknowledging the sweet spot zone. Another reason why consolidations do often take place near the 50% Fibonacci level is because of the surge in trading volume. Indeed a surge in trading volume often slows down the price action leading to a balanced market. There is a saturation of trading volume in the zone of the fifty percent Fibonacci retracement. The consolidation market pattern will determine the most appropriate trading strategy one should deploy.
7/ Combining it with the market geometry.
A simple example is to highlight the intersection between between the projected channel and fifty
percent Fibonacci retracement or the intersections between the pitchfork tool and fifty percent Fibonacci retracement.
8/ Divergence and fifty percent Fibonacci retracements
Please understand that a bullish or bearish divergence is just a warning, one must confirm it with a direct price-action trading signal.
Look for bullish and bearish divergences in the vicinity of the 50% level.
More advanced technical traders ought to check the price structure prior to the divergence. Talking about price structures, one will look for specific patterns that are in place before the divergence.
One example is the C-wave of a flat correction that takes place at the time of the divergence.
thought about the 50% Fibonacci retracement
The fifty percent Fibonacci retracement is one of the favourite Fibonacci retracements that the hedge funds and big financial institutions observe after a trend has ended. That level attracts high trading volume especially on the monthly, quarterly and yearly charts.
Many financial instruments with a strong balance sheet do find a support in that zone after a pull back. On the other hand those with weak financials often fail to to rise above the fifty percent level after a bearish trend. An intrinsically bearish stock or commodity will become overbought if it rallies into the sweet spot zone.
The 50% Fibonacci retracements level is critical key support or resistance level that neither technical traders or investors
can ignore after a trend in the financial markets. It is also vital to take into consideration the sweet spot Fibonacci trading zone when one is trading on or near the fifty percent Fibonacci key level. There are many trading software that rely on the 50% Fibonacci key level. It does not matter whether one is day, swing, position trading or investing in the financial
markets, one can not bypass the fifty percent Fibonacci retracements trading signals. Note that one will only use that Fibonacci key level more efficiently if one combines the technical trading and fundamental analysis.
I am always pleased to share more hard working practical trading tips and tricks that help. Moreover, I enjoy writing this article about the 50% Fibonacci retracements psychological key level. I hope it has been useful to you. If that is the case, please feel free to share it on major social websites. It means a lot to us.
Happy 50% Fibonacci retracements trading to everyone.
This article is written by George Beaulieu a technical trader who delights in sharing practical hard working trading tips and tricks.
Favourite statement of G Beaulieu: “Before I was blind but now I can see”
Trade 50% Fibonacci with eyes wide open.