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Fibonacci Levels (click to copy)
Frequently Asked Questions
What is Fibonacci retracement?
Fibonacci retracement levels are horizontal lines that indicate potential support and resistance based on the Fibonacci sequence ratios. The key levels are 23.6%, 38.2%, 50%, 61.8% (the 'golden ratio'), and 78.6% of the previous price move.
What is the golden ratio in trading?
The golden ratio (61.8%) is the most important Fibonacci level. It's derived from the Fibonacci sequence: each number divided by the next = ~0.618. Price frequently reverses at or near this level, making it the strongest support/resistance in Fibonacci analysis.
What is the difference between retracement and extension?
Retracement levels (0–100%) show where price might pull back within an existing trend. Extension levels (127.2%, 141.4%, 161.8%, 200%) show where price might go after completing the retracement — potential take profit targets.
How do I use Fibonacci in an uptrend?
In an uptrend: identify the swing low and swing high. Enter 'Buy' trades when price retraces to key levels (38.2%, 50%, 61.8%) with confirmation. Set take profit targets at extension levels (127.2%, 161.8%).
Why does Fibonacci work?
Fibonacci levels work largely because enough traders use them, creating self-fulfilling support and resistance. When millions of traders expect price to react at 61.8%, they place orders there, which causes the reaction they expected.