There is an area called the golden zone—the 0.5 to the 618, which ultimately means it's a 50 to 61, which essentially means it's a 50% retracement from this current high. So this is 50% of here to nearly 62%.

Within this zone, this is considered the golden zone where often times stocks respect this level—respect this golden zone to ultimately retrace higher, and you're going to see how this plays out time and time again in the stock market.

Why Simple Technical Analysis Works

And here's the misconception of technical analysis: people think you need a ton of complicated indicators. That simply is not the case. We keep it as simple as possible—that is how you become consistent in this market.

All right, to utilize Fibonacci retracement, I want you guys to clearly:

Step 1: Identify Market Direction

Number one: Identify a clear uptrend. You can also use it on the downside as well, but for our purposes I always go long in my positions. I do not short the stock market, but that's for another video.

This video we're going to identify a clear uptrend and we're going to find periods of retracement where we can long the stock.

Step 2: Drawing the Fibonacci Retracement

To draw a Fibonacci retracement—this is once again Trading View, Tesla on the daily time frame—I'm going to go over here to the left and right over here this line. There's an indicator called Fibonacci retracement.

I'm going to identify a clear uptrend and we're going to go from a swing low to a swing high, so from the lowest point to the highest point, right? So there's the lowest point from this to here.

Once again, what did I say about the golden zone? The golden zone is the zone from the 50% retracement to the 61 or 62% retracement, and this oftentimes is where the stock often gets respected.

Real-World Results

As you can see here, roughly around the 50% retracement we saw clear support to a trend higher. Present day, we are trading within the golden zone and we're seeing support around this area to higher.

Key Trading Rules

Once again, for Fibonacci retracements you're going to:

1. Identify a clear uptrend
2. Go from the swing low (start from the low all the way to the top)
3. Look for entries from the 0.5 to the 618 (this is the golden zone that often gets respected)
4. Long positions in this area

I don't want you guys to blindly enter these positions just because it enters into this, and this is where price action comes into play and confluences with these Fibonacci levels.

You guys need other areas that support your thesis that is going to rebound at this level, and I'll go over that in a separate video.

But to draw Fibonacci retracement, this is how you do it—quite simple, and we'll move on to the next video.

Summary Process:

• Identify clear uptrend
• Draw from swing low to swing high
• Focus on golden zone (50%-61.8% retracement)
• Look for confluences before entering
• Use for long positions only

So that is it for day four. We went over Fibonacci retracement. I want to know your guys' biggest takeaway from day four, and I want you guys to post it inside of the Facebook group and #day4 for me in the group.

See you guys in the next video.

• Fibonacci retracement identifies support and resistance levels
• Stocks don't go straight up—they have periods of retracement
• The golden zone (50%-61.8%) is where stocks often find support
• Keep it simple—complicated indicators aren't necessary
• Always go long—wait for pullbacks rather than shorting
• Don't blindly enter—look for confluences to support your thesis
• Draw from swing low to swing high for proper retracement levels