Today’s Topic: The 50% Fibonacci Retracement
This Quick Byte is a little different from the usual market updates. Rather than covering macro conditions or the day’s price action, this is a topic-specific walkthrough of one of the tools I use most often: the 50% Fibonacci retracement.
The basic idea is simple: when an asset makes a strong move higher, I generally don’t want to chase the breakout. Instead, I wait for the market to retrace part of that move and look for an opportunity to enter or add around the 50% Fibonacci level.
How I Set Up My Fibonacci Tool
The standard Fibonacci retracement tool in TradingView comes with a large number of levels. I simplify mine considerably because I don’t like cluttered charts.
For retracements, I primarily keep only:
0.50 — the 50% retracement
0.618 — the upper band of the “golden pocket”
0.65 — the lower band of the “golden pocket”
Everything else is generally turned off.
If an asset is in a bullish trend and pulls back toward the 50% level, I view that as an important area to watch for support. A deeper move into the 0.618–0.65 golden pocket can also represent an attractive area when the broader trend remains bullish.
How to Draw It
The process is straightforward.
Start at the lowest low of the move and draw the Fibonacci retracement up to the highest high before the pullback begins.
The horizontal position of the tool doesn’t matter. What matters is that the low and high are placed accurately. I personally extend the drawing manually to the right so I can see the levels without covering the entire chart with horizontal lines.
A recent Bitcoin example illustrates the concept. Bitcoin moved from roughly $57,000 to $66,700, and the subsequent pullback came almost directly back to the 50% retracement before finding support and moving higher again.
Why I Don’t Chase Breakouts
The practical value of this tool is avoiding the fear that you have “missed” a move.
Even during very strong bull markets, markets rarely move vertically forever. Strong advances routinely experience corrective pullbacks, and the 50% retracement gives me a systematic place to look for another entry rather than buying after a large move has already occurred.
Historical Bitcoin bull markets provide repeated examples of strong advances eventually returning toward the 50% level—and sometimes reaching the golden pocket—before continuing higher.
Current Bitcoin Levels
The larger Bitcoin move has still not completed the kind of 50% retracement I’m watching.
Depending on where the current leg ultimately tops, the retracement level naturally moves higher:
A retracement based on the current structure points toward roughly $75,000.
If Bitcoin first reaches approximately $93,800, the 50% level moves to roughly $78,000.
If Bitcoin reaches approximately $97,000, the retracement moves toward roughly $80,000.
That is also why I have been comfortable maintaining my small quarter-position short from around $81,000: a normal 50% retracement from several of the upside targets I’m watching would bring price back toward or below that entry.
The ETF Inflow Signal
Another reason I’m watching for some softness is the recent large Bitcoin ETF inflow.
In the examples shown in the video, very large ETF purchases have frequently occurred near local highs and were followed by price weakness. My interpretation is that these large retail inflows can be another sign that the market is temporarily extended.
That fits with the Fibonacci setup: the current larger move has not yet completed its broader 50% retracement.
Bottom Line
The main lesson is straightforward:
Don’t panic because you missed a breakout, and don’t automatically chase price higher.
When an asset is in a bullish trend, identify the low and high of the move, draw the Fibonacci retracement, and watch the 50% level and golden pocket for a potentially better entry.
Even very strong markets pull back. The Fibonacci retracement gives me a disciplined way to decide where I want to add rather than reacting emotionally to the move itself.
