How To Use Fibonacci With ICT Concepts Part 2

If you're a trader looking to elevate your technical analysis, mastering the use of Fibonacci retracements and extensions in conjunction with ICT (Inner Circle Trader) concepts can be a game changer. In this post, we’ll break down how to use Fibonacci tools more effectively with ICT’s powerful techniques, offering you a roadmap for smarter, more strategic trading.

Fibonacci and ICT: A Perfect Pairing

In our first video, How to Use Fibonacci With ICT Concepts, we covered the basics of Fibonacci retracements and extensions. Now, let’s dive deeper and explore how you can use these Fibonacci tools alongside key ICT concepts such as Optimal Trade Entry (OTE), Fair Value Gaps (FVG), Order Blocks, and Breaker Blocks. These advanced strategies allow you to refine your trades and significantly improve your success rate.

The Optimal Trade Entry (OTE)

The Optimal Trade Entry (OTE) is one of the most widely used concepts in ICT trading. It occurs at the 71% retracement level after a break of structure. This is where Fibonacci meets market structure and price action. For example, after price breaks a key level of structure, the market typically retraces to the 71% Fibonacci level—a prime entry point for a short or long trade, depending on market conditions.

Example:

In the London session, after a structure break, price retraces back to the 71% Fibonacci level, offering an OTE entry. This is a high-probability entry, as ICT traders typically look for this pattern to confirm trend continuation.

Breaker Blocks and Order Blocks

After understanding OTE, the next advanced concept is Breaker Blocks and Order Blocks. These are areas of previous support or resistance that price revisits during its retracement.

Breaker Blocks occur when price breaks a previous area of support or resistance, and then retraces back to the 50% level of that block.
Order Blocks are similar, where price respects the 50% level after retracing back into the order block zone.

When using Fibonacci in conjunction with these, look for price to return to the 50% level of either the order block or breaker block. This creates a powerful confluence of price action and Fibonacci, which increases your chances of a successful trade.

Fair Value Gaps and the 50% Level

Fair Value Gaps (FVG), which are the empty spaces between two price movements, often provide excellent trade entries. When price retraces back to the 50% level of the FVG, it can be an ideal point for entry.

How It Works:

When price fails to reach the 50% level of the FVG, some traders might hesitate to enter the trade. However, we’ve found that price may still respect the lower quadrant of the gap, presenting an opportunity for entry.

In our case, ICT’s Fair Value Gap Theory works best when you combine it with Fibonacci retracements. When price retraces back to the 50% level of the gap, especially in the London or New York session, it can offer high-probability setups.

Advanced Fibonacci Extensions and Breakthrough Techniques

One of the most exciting findings in this new strategy involves combining Fibonacci extensions with Fair Value Gaps. While ICT typically uses 50% retracements to measure FVG, we’ve discovered that using Fibonacci extensions from the FVG’s wick can give more precise predictions of price movement.

Key Fibonacci Extensions:

1.618, 2.382, 2.618, 3, and 4.618 are some of the key extension levels that we focus on.
When price reaches one of these extension levels, you should observe how it reacts. If it breaks structure and respects the Fibonacci zone, it’s likely that your entry will be on point.

Example of Combining Fibonacci with ICT

In a real-world scenario, after price reaches the 2.618 Fibonacci extension, a break of structure occurs, and price retraces back into a Breaker Block or Fair Value Gap. This confluence of factors—Fibonacci extension, ICT structure, and 50% retracement—creates a high-probability entry for traders.

As you move forward in your trading journey, keep an eye out for these advanced strategies. They allow you to combine ICT concepts with Fibonacci’s magic, enabling you to anticipate market movements with greater accuracy and confidence.

Key Takeaways for Your Trading

Optimal Trade Entries (OTE) are best at the 71% Fibonacci retracement after a structure break.
Breaker Blocks and Order Blocks offer prime entry points at their 50% level.
Fair Value Gaps (FVG) can also present excellent entries when combined with Fibonacci retracements or extensions.
Advanced Fibonacci extensions like 1.618 and 2.618 can help predict price movement with greater precision when anchored to Fair Value Gaps and Wicks.

By combining these ICT strategies with Fibonacci tools, you can refine your trades and increase your probability of success.

Fibonacci with ICT isn’t just about placing a few lines on your chart; it’s about understanding the market’s underlying structure and using Fibonacci’s unique properties to predict the most likely price points where trades will materialize.

Get Started Today: Ready to put these advanced Fibonacci strategies to work in your trading? Start applying them to your charts, and watch as your entries improve. Stay tuned for more insights as we continue testing and refining these methods.

Let us know how these techniques have worked for you, and feel free to share your experiences in the comments below. Happy trading!