Fibonacci Retracement
Horizontal levels derived from Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, 78.6%) that highlight potential pullback support or resistance zones.
Formula
Key ratios: 23.6%, 38.2%, 50%, 61.8%, 78.6% — derived from the Fibonacci sequence (each term ÷ the next: 34/55 ≈ 0.618).
Fibonacci Retracement levels are drawn by identifying a significant price swing (low to high, or high to low) and dividing that range by the key Fibonacci ratios. The resulting levels mark zones where price may pause or reverse during a retracement.
The most-watched levels are 38.2%, 50%, and 61.8% (the "golden ratio"). The 61.8% level in particular attracts attention — a retracement beyond it often signals a trend change rather than a continuation.
- Combine Fibs with structural levels (prior highs/lows, moving averages) for confluence entries.
- Never trade a Fib level in isolation — it is a zone of interest, not a guaranteed bounce.
Example
BTC rallies from $60,000 to $75,000. A Fibonacci retracement drawn on that leg places the 61.8% level at $65,730 and the 50% level at $67,500. Price pulls back to $65,800, wicks through the 61.8% briefly, and reverses — exactly where confluence buyers were waiting.
Related Terms
Confluence
The overlap of two or more independent technical signals at the same price level, strengthening the case for a trade.
IntermediateFibonacci Extension
Fibonacci-derived levels projected beyond a swing's origin to identify potential profit targets after a breakout or trend continuation.
IntermediatePullback
A temporary counter-trend retracement within an ongoing trend, offering a lower-risk entry in the direction of the trend.
BeginnerRetracement
A partial price reversal within a larger trend, measured as a percentage of the preceding impulse move.
BeginnerSupport
A price level where buying pressure has historically halted or reversed a downward move.
Beginner