MartialChartsFX FiReZ Strategy
MartialChartsFX FiReZ Strategy
Strategy
by
Martial Charts FX
Risk Warning
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Past performance is not necessarily a guide to future performance.
Disclosure Statement
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Disclaimer
MartialChartsFX.com and its operators may discuss some of the strategies used to trade the markets. Past performance is not a guarantee of future results.
No guarantee is being made that any individual will be able to replicate hypothetical performance results. There are certain factors that can cause a sharp
difference between the price that is read off the chart and the price that is actually achieved when a trader attempts to enter or exit a position. Such factors
include but are not limited to, the effect of slippage on stop orders or the failure of an individual’s broker to fill orders at a requested price.
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security of any kind.
Table of Contents
Introduction ..................................................................................................................................................................... 1
What You Will Need ......................................................................................................................................................... 2
Required Price Action....................................................................................................................................................... 2
Impulsive Waves and Retracement Waves ....................................................................................................................... 3
Valid Retracements .......................................................................................................................................................... 4
Trends and Ranges ........................................................................................................................................................... 6
Market Structure Range ................................................................................................................................................... 7
Imbalance ........................................................................................................................................................................ 8
Break of Structure ............................................................................................................................................................ 9
Break of Structure out of the Retracement Zone .............................................................................................................10
Breakout Expectancy Levels ............................................................................................................................................11
Change of Character .......................................................................................................................................................12
Change of Character out of the Retracement Zone..........................................................................................................13
Breakouts and Breakdowns .............................................................................................................................................15
Fibonacci Retracement Tool ............................................................................................................................................17
Measuring The Retracement Zone ..................................................................................................................................19
Fibonacci Retracement Zone ...........................................................................................................................................19
Traditional Fibonacci Retracement ..................................................................................................................................21
Criteria For A Trade Setup ...............................................................................................................................................24
Entry Methods ................................................................................................................................................................24
High Risk Entry Method (Entering From The Fibonacci Retracement Zone) ..................................................................25
Lower Risk Entry Method (Entering From The Secondary Breakout) ............................................................................26
Stochastic RSI Confluence ...............................................................................................................................................27
Stochastic RSI Settings.................................................................................................................................................27
Divergence ..................................................................................................................................................................27
Stochastic RSI Overbought or Oversold .......................................................................................................................29
About Stochastic RSI and Indicators ............................................................................................................................29
The 8 Step Trade Process ................................................................................................................................................30
Strategy Videos ...............................................................................................................................................................30
Martial Charts FX Trading Discord ...................................................................................................................................31
Before You Go .................................................................................................................................................................32
Martial Charts FX Trading: FiReZ Strategy
The Fibonacci Retracement Zone Strategy is a rules based and repeatable strategy with easy to identify and frequently
occurring trade setups. This strategy is a shortcut to Supply & Demand trading based on Market Structure, Order Flow,
and Fibonacci Retracements. Follow the strategy rules and the built in concepts will take care of themselves.
Whether you are seasoned or new to trading, I advise you not to skip anything in this book because this is a new way to
trade with Fibonacci and for finding high probability POIs algorithmically.
This strategy can be used on a variety of instruments such as Forex, Futures, Stocks, Indices, Metals, Commodities, and
Crypto.
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Martial Charts FX Trading: FiReZ Strategy
This strategy can be used on any timeframe. Lower timeframes will present more opportunities, but with a lower
probability of success. Higher timeframes will have fewer opportunities, but will have a higher probability of success due
to greater stability of market structure and price action.
Before we get into the strategy, let’s define the price action components that are required for a valid setup. A trade
setup that is missing any one of the following components is NOT a tradable setup. All these components will be
explained in detail in this text.
Before we get into the strategy, we’ll review the market structure and price action components that we must be able to
identify.
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Martial Charts FX Trading: FiReZ Strategy
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Martial Charts FX Trading: FiReZ Strategy
Valid Retracements
A valid retracement must not be confused with sideways price action. In an uptrend a valid retracement will break a low.
In a downtrend a valid retracement will break a high. This is a requirement in order to select actual and valid
retracements. If the retracement is not a correction of the impulsive move, it is a continuation of the impulsive move.
The best retracements are followed immediately by a strong impulsive wave that breaks structure and creates
imbalance. Where a valid retracement ends defines the market structure.
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Martial Charts FX Trading: FiReZ Strategy
Retracements that are at least 38.2% depth and do not cause a reversal can considered valid retracements as a rule of
thumb.
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Martial Charts FX Trading: FiReZ Strategy
An Uptrend is defined by a series of Higher Lows and Higher Highs. The emphasis on the uptrend is the creating of
subsequent Higher Lows. If price makes a Low that is lower than the previous Higher Low the uptrend is considered to
be invalid. A Higher Low is validated as a strong level of support if it leads to a Higher High. Price can make Equal Highs
or a Lower High while maintaining the Higher Lows and still be considered an uptrend until a reversal or range is
confirmed.
A Downtrend is defined by a series of Lower Highs and Lower Lows. The emphasis on the downtrend is the creating of
subsequent Lower Highs. If price makes a High that is higher than the previous Lower High the downtrend is considered
to be invalid. A Lower High is validated as a strong level of resistance if it leads to a Lower Low. Price can make Equal
Lows or a Higher Low while maintaining Lower Highs and still be considered a downtrend until a reversal or range is
confirmed.
A Range is defined as a series of Equal Highs and Equal Lows, or price failing to make Higher Highs or Lower Lows. In a
range price moves between defined levels of support and resistance until a Break of Structure occurs followed by the
creation of a Higher Low (bullish BOS) or a Lower High (bearish BOS).
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Martial Charts FX Trading: FiReZ Strategy
As long as price stays within this range on the given time frame, the current structure is intact on that time frame. Price
may retrace to the extremes of the range without being considered a reversal. Price may also create Equal Highs and
Equal Lows within the current structure without being considered a reversal.
Structure ranges can be found on every time frame. The most recent market structure range created by an impulsive
wave is the structure that should be analyzed and traded within starting at higher time frame structures and working
down to the lower time frames.
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Martial Charts FX Trading: FiReZ Strategy
Imbalance
Imbalance is inefficient price action where price moves so rapidly that buyers and sellers are unable to fully participate
in the market. This is represented on the chart where there is a candle that has a candle to its left and a candle to its
right that do not have touching or overlapping prices.
Bullish Imbalance: Inefficient price action in a bullish candle (usually a large body candle) that does not have overlapping
price action by the candles to its left and right.
Bearish Imbalance: Inefficient price action in a bearish candle (usually a large body candle) that does not have
overlapping price action by the candles to its left and right.
Imbalance is important because it shows momentum of price and the intent of the banks, which is why it is requisite
price action for a trade setup.
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Martial Charts FX Trading: FiReZ Strategy
Break of Structure
A Break of Structure (BOS) occurs when the market structure range is broken in a continuation of the trend resulting in
the establishment of a new market structure range. The Break of Structure is required in order to define the
Retracement Zone. Retracements Do Not Break Structure. Only Impulsive Waves Can Break Structure. The Break of
Structure must create Imbalance.
Bullish Break of Structure: The last Higher High is exceeded (broken) by a new Higher High in an uptrend.
Bearish Break of Structure: The last Lower Low is exceeded (broken) by a new Lower Low in a downtrend.
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Martial Charts FX Trading: FiReZ Strategy
Uptrend Scenario
Downtrend Scenario
The Break of Structure must occur with at least 2 consecutive candle bodies closing above the broken Higher High (for a
Bullish BOS) or below the broken Lower Low (for a Bearish BOS).
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Martial Charts FX Trading: FiReZ Strategy
Height of the initial breakout above the resistance is the expectancy of future breakouts
If trading a breakout or breakdown, it is not advisable to trade the initial breakout or breakdown. It is best to wait for a
breakout or breakdown to occur to show how far price can rally or drop after breaking out from the level. To enter a
trade on a secondary break of the level (referred to as the Lower Risk Entry Method later in this text), wait for price to
have a candle close above Resistance or below Support and target the high of the initial breakout (if buying) or the low
of the initial breakdown (if selling).
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Martial Charts FX Trading: FiReZ Strategy
Change of Character
A Change of Character (CHoCH) is a type of Break of Structure but it only occurs in a reversal. It occurs when the market
structure range is broken out of in a reversal resulting in the establishment of a new market structure range. The Change
of Character will cause a retracement zone flip and requires special attention in order to define the prior retracement
zone. The Change of Character must create Imbalance.
Bullish Change of Character: The last Lower High is exceeded (broken) by a new Higher High in a reversal of a
downtrend.
Bearish Change of Character: The last Higher Low is exceeded (broken) by a new Lower Low in a reversal of an uptrend.
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Martial Charts FX Trading: FiReZ Strategy
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Martial Charts FX Trading: FiReZ Strategy
Bearish Change of Character with Stop Hunt and Zone Flip (Zone Failure)
Bullish Change of Character with Stop Hunt and Zone Flip (Zone Failure)
Bullish Change of Character with Stop Hunt and Zone Flip (Zone Failure)
Like the Break of Structure, a Change of Character cannot occur with a wick BOS. The Change of Character must occur
with at least 2 consecutive candles closing above the broken Lower Highs (Bullish CHoCH) or below the broken Higher
Lows (Bearish CHoCH).
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Martial Charts FX Trading: FiReZ Strategy
Bullish Breakout: The high of the range is broken by a Higher High and a new market structure range is established.
Bearish Breakdown: The low of the range is broken by a Lower Low and a new market structure range is established.
Like the Break of Structure and Change of Character, a Bullish Breakout or Bearish Breakdown cannot occur with a wick
BOS. The Breakout or Breakdown must occur with at least 2 consecutive candles closing above the Range Highs (Bullish
Breakout) or below the Range Lows (Bearish Breakdown).
Range zones, like retracement zones, require a BOS or CHoCH in order to be defined as a zone.
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Martial Charts FX Trading: FiReZ Strategy
The illustration above is a failed range zone (sideways price between the CHoCH and Stop Hunt levels). Price broke down
below the range and then violated the range on retest (range zone failure), then the role reversed to bullish after the
breakout and retest of the range zone
It is best to stick with Break of Structure (trend continuation) setups until you are proficient before attempting to trade
Change of Character (trend reversal) or Breakout/Breakdown (range breakout) setups. Your account balance will thank
you.
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Martial Charts FX Trading: FiReZ Strategy
The Fibonacci Retracement Tool is used to gauge the depth of a retracement by measuring the most recent impulsive
wave that breaks structure (BOS) or Change of Character (CHoCH).
The Fibonacci Retracement tool can give the trader non-discretionary trade entries and exits based on where a zone falls
within the framework of Fibonacci.
For this strategy you will need the following Fibonacci Retracement Levels:
0.0 (0%) – End of the impulsive wave and TP3/TP4 dependent on Entry method
0.118 (11.8%) – TP2/TP3 dependent on Entry method.
0.236 (23.6%) – TP1/TP2 dependent on Entry method.
0.382 (38.2%) – TP1 is using High Risk Entry method.
0.5 (50%) – Start of minimum trade zone
0.618 (61.8%) – Start of preferred trade zone
0.702 (70.2%) – Midpoint of 61.8% and 78.6%
0.786 (78.6%) – End of preferred trade zone
0.886 (88.6%) – Stop Loss level for High Risk Entry model. Optional
1.0 (100%) – Start of the impulsive wave and Stop Loss Level for High Risk Entry model
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Martial Charts FX Trading: FiReZ Strategy
The Fibonacci Retracement Tool is set by dragging from the swing low (Point A) to the swing high (Point B) in an uptrend
and from the swing high (Point A) to the swing low (Point B) in a downtrend. The 100% level (Point A) is always at the
start of the impulsive wave and the 0% (Point B) is always at the end.
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Martial Charts FX Trading: FiReZ Strategy
While we still are measuring the Retracement Zone with the Fibonacci tool, we need to place a horizontal line at the
50% level to identify the equilibrium of the Retracement Zone as shown below. This line will be used for determining
confluence later.
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Martial Charts FX Trading: FiReZ Strategy
After having the equilibrium line in place draw a rectangle zone that captures 11.8% to 61.8% of the Retracement Zone.
This will be the ‘start’ of the Fibonacci Retracement Zone.
Once the Fibonacci Retracement Zone and Equilibrium are in place, we move onto measuring the Traditional Fibonacci
Retracement.
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Martial Charts FX Trading: FiReZ Strategy
Measuring the impulsive wave to gauge the depth of the retracement (Traditional Fibonacci Use)
If there is Fibonacci Retracement Zone that extends beyond 50% going towards 38.2%, you adjust the Fibonacci
Retracement Zone to be at 50%. You are not taking a trade from any place on the traditional Fibonacci retracement
that is less than 50%.
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Martial Charts FX Trading: FiReZ Strategy
If the Fibonacci Retracement Zone doesn’t touch overlap the 50% Fib level, as in the following example, there is no need
to adjust the zone any further.
High Probability Setup with Traditional Fibonacci over Fibonacci Retracement Zone and Equilibrium Line
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Martial Charts FX Trading: FiReZ Strategy
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Martial Charts FX Trading: FiReZ Strategy
Note: If price is overall bullish, your best setups will come from a BOS that is also bullish and vice versa when price is
overall bearish.
Entry Methods
Depending on your trading style and risk tolerance, there are 2 options for taking entries in the FiReZ Strategy. Those
include High Risk Entries and Lower Risk Entries. Every trade has inherent risk so there is not a ‘No Risk’ entry option.
With a Lower Risk Entry, you are accepting a lower reward for lower risk. With a High Risk Entry you are accepting
greater risk for a greater reward.
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Martial Charts FX Trading: FiReZ Strategy
High Risk Entry Method (Entering From The Fibonacci Retracement Zone)
Once the setup is identified with a valid Retracement Zone, wait for price to trade into your Fibonacci Retracement
Zone. If price goes beyond the Fibonacci Retracement Zone, price must have a candle close back inside the Fibonacci
Retracement Zone.
The candle that enters the zone needs to close with a wick at or inside of the zone. The body may close inside of the
zone but there must be a wick showing rejection. Patience is key. The deeper you allow price to go in the zone
before entering the more you save in potential drawdown and risk.
Wait for a candle to show signs of reversal by not trading beyond the wick of the first candle inside the zone.
Scale down to a lower timeframe to verify that bullish structure is forming at the Fibonacci Retracement Zone
Enter your trade before price crosses back over the Traditional 50% Retracement level, if practical.
Place your stop loss beyond the recent low/high that tested the Fibonacci Retracement Zone and beyond the
Fibonacci Retracement Zone.
Target the Fibonacci 11.8% or Fibonacci 0% levels as your Take Profit.
Warning: The Fibonacci Retracement Zones are high probability when properly identified. Price may touch and
immediately reverse without giving any confirmation at the zone.
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Martial Charts FX Trading: FiReZ Strategy
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Martial Charts FX Trading: FiReZ Strategy
Divergence
Note to make divergence easier to spot, I disable the %D signal line on Stochastic RSI and use only %K which is the actual
stochastic line.
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Martial Charts FX Trading: FiReZ Strategy
Plotting Divergence
1. Connect highs or lows on the chart following the same rules as drawing an ordinary trend line. In a downtrend
connect lower highs, in an uptrend connect higher lows. You are connecting the end points where a retracement
ends and the impulsive wave begins.
2. Connect the corresponding values on the Stochastic RSI. It’s acceptable when drawing the trend line on
Stochastic to draw through the Stochastic peaks and valleys since we are only measuring the difference in
Stochastic values for the corresponding highs or lows of price.
Hidden Bearish Divergence. Vertical lines used as a guide for matching the trendlines.
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Martial Charts FX Trading: FiReZ Strategy
A zone has a higher probability of holding if these overbought or oversold conditions are met when price reaches a zone.
You will not always see divergence that supports your trade setup. That doesn’t mean that the trade won’t work out in
your favor, it means that you have less confluence and a lower probability setup. Your higher probability setups will have
Hidden Bullish Divergence form at the zone when buying and Hidden Bearish Divergence form at the zone when selling.
You should avoid trading when there is divergence that is contrary to your setup, for example if you are buying and
there is bearish divergence it is probably best to wait for another opportunity.
Stochastic RSI may not always be overbought or oversold when price reaches your zone. This doesn’t necessarily
disqualify a trade, but it does reduce the confluence for the trade.
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Martial Charts FX Trading: FiReZ Strategy
Strategy Videos
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Martial Charts FX Trading: FiReZ Strategy
https://discord.gg/DDrrwwVUnx
https://discord.gg/DDrrwwVUnx
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Martial Charts FX Trading: FiReZ Strategy
Before You Go
This strategy, if applied correctly, can be consistently profitable. Please back test to improve your proficiency in
identifying and validating zones. Forward test on demo before considering trading in a live market environment.
This strategy is a simplified way to trade and includes some ‘smart money concepts’ which are built into the rules so that
beginners can focus on a specific set of variables to find and execute setups without the distractions of ‘smart money
concepts’.
There is much more to price action, market structure, order flow and Fibonacci than what is in this book since this was
designed for the beginner trader that seeks consistency or for the experienced trader that wishes to expand their
repertoire.
If you want to learn more advanced concepts, I recommend checking out my other content The Smart Fibonacci
Method. The Smart Fibonacci Method is a Fibonacci based framework for trading with Supply and Demand, Price
Action, Market Structure, and Smart Money Concepts.
Course: Interactive online course with 60+ videos (14+ hours of runtime) and reading material.
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Martial Charts FX Trading: FiReZ Strategy
https://martialchartsfx.com
https://linktr.ee/martialchartsfx
https://www.youtube.com/@MartialChartsFX
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