Fibonacci Retracement
Fib · module 31 of 33 · levels
Proportional retracement levels of a measured swing.
- 0.0%
- 38.2%
- 50.0%
- 61.8%
- 100.0%
- ▲/▼ where the rule triggers
Drawn from swing low to swing high. The 38.2–61.8% zone is where pullbacks in a trend are most often watched.
How to apply it
- 1. Add it. Start with Session swing on 15m, watch 0.382–0.618 (Intraday).
- 2. Read the market first. The 0.382–0.618 zone is where trend pullbacks commonly pause; treat it as a zone to look for a trigger, not a level to buy blindly.
- 3. Adjust for ranges. Meaningless without a clear impulsive swing to measure.
- 4. Manage the trade. Place the stop at 1.5 × ATR and the target at 3.5 × ATR, and only act when the chart above shows the trigger.
How it is calculated
Level = swing high − ((swing high − swing low) × ratio), with ratios 0.236, 0.382, 0.5, 0.618, 0.786.
Inputs
- · Swing high
- · Swing low
- · Ratio set
Reading it correctly
In a trend
The 0.382–0.618 zone is where trend pullbacks commonly pause; treat it as a zone to look for a trigger, not a level to buy blindly.
In a range
Meaningless without a clear impulsive swing to measure.
Settings by style
| Style | Suggested values |
|---|---|
| Intraday | Session swing on 15m, watch 0.382–0.618 |
| Swing | Daily swing on 4h, watch 0.5–0.618 |
These are conventional starting points, not optimised values. Test any change on your own pair and timeframe before relying on it.
Worked example
Swing low 1.0800 to swing high 1.0900 (100 pips): 0.382 = 1.0862, 0.5 = 1.0850, 0.618 = 1.0838. If the trend is up and price reaches 1.0850, the pullback is half retraced — a zone to await a completed bullish close, not a reason to buy immediately.
When it failed
Two traders drew fibs on the same GBP/USD chart using different swing points. One's 0.618 was 1.2650, the other's 1.2685. Both then reported that 'the 0.618 held', selecting whichever level matched the outcome.
Limitations
- Entirely dependent on subjective swing selection — the least objective tool in the library.
- No mechanism explains why these ratios should matter.
- Levels are easy to rationalise after the fact.
Works well alongside
- · Market structure
- · EMA
- · ATR
Redundant with
- · Pivot points
- · Prior swing levels
Stacking these produces agreement by construction, which is not confirmation.
Practice exercise
Fix an objective swing rule (two lower highs each side) before drawing. Then record 20 pullbacks into the 0.382–0.618 zone on 4h EUR/USD and how many produced a completed trigger candle.
Check your understanding
1. The largest weakness of Fibonacci retracement is:
- · It lags
- ✓ Swing selection is subjective, so levels differ between traders
- · It needs volume
- · It only works on daily charts
Different swing points produce different levels, which makes the tool hard to test unless the swing rule is fixed in advance.
2. For a 200-pip swing from 1.2000 to 1.2200, the 0.618 retracement is:
- · 1.2124
- ✓ 1.2076
- · 1.2100
- · 1.2038
1.2200 − (0.0200 × 0.618) = 1.2200 − 0.01236 = 1.20764.