We are going to be looking at Binance Coin vs Tether (BNBUSDT) and how to find the next target/resistance level or higher high utilizing the Trend-Based Fibonacci extension tool.
Targets are nothing more than resistance levels.
Resistance levels for any cryptocurrency trading pair are the areas where resistance is met on the way up.
Normally at these levels any additional growth can be stopped and a retrace, consolidation phase or full reversal can happen.
For trading purposes, we call these resistance levels targets and use them to sell for profits.
Let’s have a look at the chart:
In this chart we can find the last 7 months for Binance Coin vs Tether (BNBUSDT). We are looking for a higher high, the next target, because of the bullish signals that are already in place.
- A low was hit in June ’22 which can be seen on the chart, followed by a higher low in November ’22.
- We also have a higher high in place before the Nov. low.
- The RSI is really strong (71), not shown here.
- And we have an ascending channel, which is the higher high and higher lows combined together.
There are many ways to find resistance levels such as moving averages, Bollinger bands and many other indicators. The last high and peak prices from previous bullish waves can also be used as targets/resistance levels. Previous failed support levels on the way up can work as resistance as well… In this case we will focus on the Trend-Based Fibonacci extension tool.
- To use this tool you need to plot the first value at the initial low, before the action starts. In this case that’s the June ’22 low (183.4).
- The second value is the highest peak after this low, in this case 8-November ’22 (398.3)
- The third and last value is the higher low, in this case it happened 17-Dec. ’22 (220).
This will give you a set of numbers based on the Fibonacci sequence as seen on the chart.
The most relevant levels are 0.382, notice how resistance was met at this level before BNBUSDT continued up. Followed by 0.618 which is the golden ratio and thus a very important level. 0.786 is less relevant but many times comes into play, 1 is also a strong level but for a higher high the most important level is the 1.618, sitting at $566 in this case.
If we wanted to figure out where Binance Coin was going, we would say that the next resistance for a higher high sits around $566. Based on how this level is handled, we can look at the support levels if a rejection shows up or look for higher prices if the chart shows potential for additional growth.
More numbers and data can be extracted from the chart but this is just a basic method to find out the right level at which to sell and secure profits if you are buying crypto for trading purposes.
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