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What are Fibonacci levels?
Fibonacci retracement levels are horizontal lines drawn between a swing high and a swing low. Traders watch them as possible areas where a pullback may pause. The ratios come from the Fibonacci number sequence, and 50% is added by convention.
Uptrend retracement = Swing high − (Swing high − Swing low) × ratio
Downtrend retracement = Swing low + (Swing high − Swing low) × ratio
Uptrend extension = Swing low + (Swing high − Swing low) × ratio
Downtrend retracement = Swing low + (Swing high − Swing low) × ratio
Uptrend extension = Swing low + (Swing high − Swing low) × ratio
How to use it
- Pick a clear swing. In an uptrend, measure from the swing low up to the swing high. The 38.2%, 50% and 61.8% levels are the ones most often watched for pullbacks.
- Extensions (127.2%, 161.8% and beyond) are used as possible targets once price moves past the swing.
- Automatic mode uses the highest high and lowest low over the look-back you choose. You can also enter your own swing high and low.
Common questions
Do Fibonacci levels predict where price will turn?
No. They mark areas traders pay attention to, and price often moves straight through them. Use them together with other tools.
Highs and lows, or closing prices?
Most charting platforms measure from the highs and lows (the wicks), and that is the default here. Closing prices ignore the wicks and give smoother swings.
Why does the trend matter?
It decides which end of the range the levels are measured from. In an uptrend the 0% level sits at the swing high. In a downtrend it sits at the swing low.