Fibonacci Retracement — Trading Wiki

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What Fibonacci Retracement means

Fibonacci retracement plots conventional fractions of a selected price swing, often 23.6%, 38.2%, 50%, 61.8% and 78.6%. The 50% level is a common chart convention, not a Fibonacci ratio, and none of these lines guarantees support or resistance.

In depth

A retracement drawing selects a price high and low, then marks fractions of their difference. Common chart conventions include 23.6%, 38.2%, 50%, 61.8% and 78.6%; 50% is a midpoint convention rather than a Fibonacci-sequence ratio. The chosen endpoints and interval materially change the levels. Arithmetic does not establish that buyers or sellers will appear at a marked price. Several drawings can fit the same history, so specify the endpoints before reviewing later candles and keep cases where price passes through the levels. The background reference explains historical chart analysis, not a measured success rate for these ratios.

Key points

• Key levels: 23.6%, 38.2%, 50%, 61.8%, and 78.6%
• 61.8% is a selected reference ratio, not a probability of a reversal
• Combining chart tools does not establish a success probability

Why it matters when you are learning

Calculate the levels from a clearly identified high and low, then compare how changing those anchors changes the chart. A Fibonacci ratio alone does not establish a reversal probability.

Worked exercise and its limits

For an invented rise from $80 to $120, a 50% retracement is $100 and a 61.8% retracement is $95.28. These are selected arithmetic levels, not probabilities. Sketch both a rebound and a continuation through each level.