Technical Analysis 1 min read
Fibonacci Retracement
Also known as: Fib, Fib Levels, Golden Ratio
Horizontal levels drawn from a move's extremes at ratios derived from the Fibonacci sequence. Used to anticipate pullback depth.
Key levels
- 0.236 / 0.382 — shallow pullback (strong trend).
- 0.5 — midpoint (not a true Fib number but widely watched).
- 0.618 — the «golden» retracement. Deep but still a valid trend pullback.
- 0.786 — last defense before a full invalidation.
How to draw
Pick a clean swing low → swing high (in an uptrend). The tool anchors 0% at the high and 100% at the low, plotting retracements in between.
Caveats
Fibs work because traders watch them, not because markets obey geometry. Confluence matters — a Fib level that aligns with a prior support / resistance level and a moving average is much stronger than a lonely Fib line.