Fibonacci Retracements

~7 min

Level 3 · Analyst~7 min0%

Ratios borrowed from a 13th-century sequence

Fibonacci retracement levels are derived from ratios found in the Fibonacci number sequence (0, 1, 1, 2, 3, 5, 8, 13, 21...), where dividing certain numbers by others in the sequence produces recurring ratios like 0.618 and 0.382. Traders apply these ratios to a recent price swing (a clear high and low) to mark potential support/resistance zones during a pullback.

Drawing it and the key levels

To draw a Fibonacci retracement, you select a significant swing low and swing high (or vice versa for a downtrend), and the tool automatically marks horizontal lines at the standard ratio levels in between. These are watched as zones where a pulling-back trend might pause or reverse before potentially continuing in the original direction.

23.6% — a shallow retracement level
38.2% — a common pullback level in strong trends
50.0% — not technically a Fibonacci ratio, but universally included as a psychological midpoint
61.8% — the "golden ratio" level, often watched as the deeper pullback zone
78.6% — a deep retracement, close to a full round-trip of the swing

Pro Tip

Fibonacci levels work best when they line up with another form of confirmation — like a round-number support/resistance zone or a prior swing point — rather than being traded in isolation.

Standard Fibonacci retracement levels drawn over a price swing from low to high.

See Fibonacci ratios applied live

The Technical Analysis report applies these exact ratios (23.6% / 38.2% / 50% / 61.8% / 78.6%) to a live, explicitly-labeled illustrative price band.

Checkpoint Quiz

Question 1 of 5

Fibonacci retracement ratios are derived from:

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