Bitcoin Bouncing Off The Local Golden Pocket

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So you may be asking, what is the local golden pocket? When you use the Fibonacci retracement tool to find support and resistance levels for your next trade, you will find that the price likes to bounce off of certain levels. These levels usually indicate zones where there was a lot of volume being traded and creates strong levels of supply and demand that the trading algorithms like to utilize. The golden pocket is generally the zone between the 0.5 and 0.618 Fibonacci levels. Bitcoin loves to come back and retest this level, so historically, it’s a big volume level for traders.

The Fibonacci sequence is a naturally occurring mathematic phenomenon that certainly has found its place in the trading world. As I mentioned above, high-frequency trading algorithms like to use these levels to put in buy and sell orders. It’s also one of the biggest tools used by retail traders so institutional players like to use these levels to help them put in the best buy and sell orders possible. Many times, they will put their buy orders just below one of these levels so that if price drops to it or just below it, they will be able to buy up as much as they can on sale. Once they have had their fill, then the price generally bounces, at least temporarily.

In the example above, we see that the price dropped below the 0.382 level that had been tested as support a few times at this point. The current bounce level is the 0.5 level which represents a 50% retracement of that local zone from the previous swing low to the current swing high.

As I said, Bitcoin likes to test that golden pocket, which is a great zone for traders to put in buy orders, even just for small short-term pops. In this case, you see that Bitcoin is now finding the 0.382 as resistance so now we are looking at a possible continuation downward, or we can find price ranging in this zone for some time.

All we can do is take it one candle at a time and adjust when we get new data! Hope these articles help you understand ways you can use tools like the Fibonacci retracement tool in your trading playbook!