Fibonacci trading strategy is extremely popular in the long term oil trader due to its high reliability and accuracy in the long term trading signal. The professional trader uses the most recent swing high and swings low to draw the Fibonacci retracement level in any financial assets. The most popular Fibonacci retracement level used by the professional traders is the 61.8%, 50%, and 38.2 % retracement level.
Let us see an example of advanced Fibonacci trading system with Price Action Confirmation signal
Figure: Trading the Crude Oil with Fibonacci retracement tools and candlestick confirmation patterns
Generally, the trader can use the pending order in the most significant Fibonacci retracement level but the advanced Fibonacci trader uses price action confirmation signal and previous support and resistance zone confluence, to trade at the important Fibonacci retracement level. In the above figure, the oil price formed a nice bullish engulfing pattern right at 50% Fibonacci retracement level.
If you carefully notice then you will find out that the professional trader also used previous support zone confluence while taking the long entry at this important level. There are two ways to put a stop loss while trading the advanced Fibonacci trading strategy. Some professional traders use tight stop loss which is set right below or above the confirmation candlestick pattern and some prefer to put their stop loss below or above the 61.8% Fibonacci retracement level, depending on the trend. Regarding take profit level, most of the advanced Fibonacci traders uses trailing stop loss and carry their trade along with the trend.