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- TSP #21: Retracements
Marco Johanning
Hello everyone!
Welcome to the 21th edition of my newsletter! Every Saturday I’ll be sending out a quick newsletter on how to master crypto.
Today, I focus on retracements.
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Percentage Retracements
Every price movement includes retracements, where prices temporarily move against the prevailing trend before continuing in the original direction.
Before Fibonacci levels became popular, people used to talk about percentage retracements, because retracements tend to follow specific percentage ranges.
The most well-known is the 50% retracement, where prices retrace about half of the prior move before resuming the trend.
Additionally, there are the one-third (33%) and two-thirds (66%) retracements, dividing the price trend into thirds. A minimum retracement is usually about 33%, and a maximum is about 66%.
These retracement levels are useful for identifying potential buying or selling areas. Furthermore, another exciting topic arises from this: speedlines. We will cover that next week!
If prices go beyond the two-thirds retracement, it suggests a trend reversal rather than a simple retracement. Usually 100% of the trend are retraced then.
Fibonacci retracements
Today, everyone uses Fibonacci retracements, but the most important levels are roughly the previously mentioned: the one and two-thirds and halfway.
Fibonacci retracements have a significant advantage: there's a tool for them in TradingView.
For this reason alone, I exclusively use Fib retracements, but it's important to note that we're talking about price ranges.
And now have a look at the range from the 2022 low to the 2023 high. The significance becomes evident.
The most important turning points are corresponding with the fibonacci levels.
Statistically speaking, it's most likely that the price will either bounce at the current level (33% retracement), or at 23.5k (50% retracement), or at 21k (66% retracement) than elsewhere.
If it goes lower than 21k, the probability is extremely high that it will fully retrace the uptrend.
By the way, the largest liquidation pool is located at 23.5k, and there is a CME gap at 21k - indeed very interesting levels.
Confluences
However, these levels are also well protected.
Because when you also draw Fibonacci retracements from two other significant lows, you can see the overlap at the current level.
This technique can also be applied to shorter timeframes to identify significant price areas. As long as you can still see a chart ;-)
Twitter Reads
Wait! No bullrun 2024/2025?
Most people on CX don't care too much about macro.
This is a big mistake IMO.
Consens here is there will be a bull run in 2024/25.
I honestly doubt it.I see several indicators on macro, unfortunately none of them are bullish.
Let's dive in 👇
— Crypto Phoenix (@phoenix_gems47)
8:01 AM • Sep 21, 2023
Looking forward to Momentum ;-)
This useful info-graphic is a summary of how I have seen market phases cycle over the course of most years
— Will Hunting (@wmd4x)
2:02 PM • Sep 19, 2023
No words for this.
Crypto family 😔
These are desperate times and I sadly need to inform you all that life is getting truly tough.
I ask you for your donations.
Don't be fooled by my 650k Binance account, my Lambo cars or my million dollars worth of property.
These are only fraction of what I… twitter.com/i/web/status/1…
— Crypto Nova (@CryptoGirlNova)
5:14 PM • Sep 20, 2023
With my best regards and wishes, I hope you have a wonderful weekend. And always remember, the most valuable currency is time.
Marco Johanning
