A strong strategy for capturing rebounds: Combining Fibonacci + RSI Divergence
One of the strongest ways to enter after a short downward wave within an upward trend is to combine:
1️⃣ Fibonacci levels to know where the correction might stop
2️⃣ Hidden positive divergence on the RSI to confirm the continuation of the upward trend
Working method:
• Identify the bottom of the trend and then its peak.
• Pull the Fibonacci from the bottom to the peak.
• Monitor the levels 38.2% – 50% – 61.8% as they are the strongest rebound areas.
• If the price rebounds from the 50% area or close to it, this is a preliminary signal.
The main entry signal:
When the price drops to a strong Fibonacci level (like 50%)
and a hidden positive divergence forms on the RSI
(the price makes a lower low while the RSI makes a higher low)
➡️ Here we consider that the correction has ended, and a continuation of the rise is expected.
📈 Entry:
After a reversal candle appears at the Fibonacci level, preferably above 38.2%.
📉 Stop Loss:
Below the 61.8% Fibonacci level.
🎯 Exit Targets:
• First target at 38.2%
• Second target at the previous peak level
• And one can continue if buying strength appears
Why does this method work?
Because divergence tells you that the true momentum of the rise has not ended, and Fibonacci specifies exactly where the correction ends.
Combining the two indicators gives you an early and accurate entry with very low risk.
