The Support & Resistance & Fibonacci Strategy is a precision-based trading approach that blends horizontal price zones with Fibonacci retracement and extension levels to identify high-probability entry and exit points. By aligning key Fibonacci levels with well-established support or resistance zones, this strategy provides confluence that improves trade timing and confidence, especially in trending or retracing markets.

This method works particularly well on 4H, Daily, and Weekly charts for swing trading, but can also be adapted for shorter timeframes with clear market structure.

Why Combine Support/Resistance with Fibonacci?

• Support and resistance highlight zones where price has historically reacted, paused, or reversed
• Fibonacci retracements identify potential pullback levels within trends
• When both align, they create a confluence zone, improving trade validity and reducing false signals
• This confluence often signals institutional order zones, enhancing your edge

Strategy Objective

• Identify a trend or reversal point in the market
• Plot Fibonacci levels from the recent swing high to low (or vice versa)
• Confirm overlapping horizontal support/resistance levels
• Enter trades when both tools align with candlestick or momentum confirmation

Key Fibonacci Levels to Watch

Level	Interpretation
38.2%	Shallow retracement (strong trend)
50.0%	Common retracement zone
61.8%	Golden ratio – strong reversal area
78.6%	Deep pullback, often trap zone
100% / 127% / 161.8%	Extension targets

Step-by-Step Strategy Execution

Step 1: Determine Market Context

• Use price action or moving averages to identify uptrend or downtrend
• In trending markets, expect retracements to enter in direction of trend
• In range-bound markets, expect reversals at support/resistance confluence

Step 2: Plot Fibonacci Levels

• In an uptrend: Draw Fib from swing low to swing high
• In a downtrend: Draw Fib from swing high to swing low
• Mark key levels (38.2%, 50%, 61.8%, 78.6%) for potential retracement entries
• Add extensions (127%, 161.8%) for target zones

Step 3: Identify Support & Resistance Zones

• Look left on the chart and draw horizontal lines where:
  • Price reversed multiple times
  • Consolidations or breakouts occurred
  • Candlestick wicks overlap
• Zones that align with Fibonacci levels become confluence zones

Step 4: Wait for Price Reaction and Confirmation

• Look for bullish candlestick patterns at support + Fib retracement
• Look for bearish patterns at resistance + Fib retracement
• Ideal confirmations:
  • Bullish engulfing at 61.8% + support
  • Pin bar rejection at 50% + resistance
  • RSI divergence at key Fib level

Step 5: Entry, Stop-Loss, and Target Placement

Entry:

• On close of confirmation candle at confluence zone
• Or pending order slightly above support (long) / below resistance (short)

Stop-loss:

• Below the confluence zone (e.g. below 78.6% or nearest swing low)
• Above resistance if shorting

Target:

• First TP at prior swing high/low
• Final TP at 127% or 161.8% Fib extension
• Trail using moving average or structure breaks

Example: Bullish Setup with Confluence

• EUR/USD in uptrend, pulls back from 1.1000 to 1.0750
• Fib drawn from 1.0750 (low) to 1.1000 (high)
• 61.8% retracement = 1.0850
• Horizontal support from previous breakout also at 1.0850
• Bullish pin bar forms on 4H chart
  → Entry at 1.0860, SL below 1.0825, TP at 1.1000 and 1.1080 (127%)

Advantages

• Combines structure and ratios for precision entries
• Filters out weak Fib levels using historical S&R zones
• Works across timeframes and markets (forex, crypto, indices)
• Enhances discipline by requiring multi-level confirmation

Limitations

• Requires clear swing highs/lows to plot Fib accurately
• S&R zones are subjective—requires chart experience
• Price may test beyond a level before reacting (fakeouts)
• Not ideal in highly choppy or news-driven conditions

Risk Management Tips

• Always wait for confirmation (candlestick or momentum)
• Adjust stop-loss based on recent structure and volatility
• Don’t use too many Fib levels—focus on 38.2%, 50%, and 61.8%
• Avoid overlapping trades in correlated pairs

Conclusion

The Support & Resistance & Fibonacci Strategy is a disciplined, technically sound method that blends price structure with natural market rhythms. When Fibonacci retracement or extension levels line up with clear support or resistance zones, traders gain a powerful edge for entering and exiting with precision.

To learn how to apply this strategy in live markets and master institutional confluence techniques, enrol in our Trading Courses and elevate your charting and execution skills.