The earlier Fibonacci lesson in this course drew one retracement in an uptrend. This one pulls the tool both ways and reads what happens beyond the swing.
The levels the course uses
| Level | Role in the course |
|---|---|
| 0.236, 0.382, 0.5 | shallow, mid and half retracements |
| 0.618 to 0.786 | the golden pocket; in an uptrend, where pullbacks tend to end; in a downtrend bounce, where rallies tend to fail |
| 0.702 | an extra level the course author watches inside the pocket. The author's reason is numerological; treat it as one more line in the pocket, not a fact about markets |
| 0.888 | the author's preferred reaction zone on a bearish retracement, where a market that is going to turn has often turned |
| 1.618, 2.618, 3.618 | extension levels, measured beyond the swing, where trends have historically paused |
| 4.236 | the author's "overheated" level, where blow-off tops have formed in past cycles |
The lesson chart's Fib tool draws 0 to 1 with the golden pocket shaded. The Technical Analysis chart's Fib tool carries the extension levels as well, and its settings dialog lets you add or remove levels for the session.
Pulling it both ways
Bullish retracement: click the swing low, drag to the swing high. The levels below the high are where a pullback may pause. The pocket is support.
Bearish retracement: click the swing high, drag to the swing low. The levels above the low are where a bounce may fail. The pocket is resistance, and 0.236 above the low is often the first ceiling on the way back down.
Bull traps and dead-cat bounces
A bull trap is a bounce that reaches the golden pocket, gets rejected, and then breaks the prior low. A dead-cat bounce is the same shape in a downtrend: high, correction, a relief rally that fails inside the pocket, lower low. Both are the pocket doing its job as resistance. The tell is not the entry into the pocket but the rejection from it.
The course author uses 0.702 as the precise rejection line inside the pocket. You can draw it; just know whose level it is.
Extensions
Once price clears the full swing (level 1), the 1.618 is the first extension traders watch, then 2.618 and 3.618. These are places where past trends paused, not targets. If anyone tells you a coin "will reach" an extension, that is a prediction, and this course does not make them.
In the lab
Draw a retracement on the lesson chart, then switch on the auto zones and the orange 21 EMA. Where a zone, the 21 and the pocket overlap, you have confluence, which is the only way this course ever uses a Fibonacci level.