🐚 Levels indicator

Fibonacci Retracement (FIB): How to Read It

Fibonacci retracement draws horizontal levels between a swing high and swing low at key ratios. Traders watch these levels as possible areas where a pullback might pause or reverse.

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The formula

Range = SwingHigh - SwingLow Level(r) in uptrend = SwingHigh - r * Range Common r values: 0.236, 0.382, 0.5, 0.618, 0.786

Common settings: Levels 23.6%, 38.2%, 50%, 61.8%, 78.6%

How to read it

The 38.2%, 50% and 61.8% levels are the most watched.
Shallow pullbacks to 23.6% or 38.2% often signal a strong trend.
Deep pullbacks beyond 61.8% suggest the trend may be weakening.
Levels work best when they line up with other support or resistance.
Results depend heavily on which swing points you choose.

Typical signals

Bullish reversal candle at the 50% or 61.8% level in an uptrend.
A level lining up with a moving average as a confluence zone.
A clean break through 78.6% as a warning the trend may be ending.

Pitfalls to avoid

Choice of swing points is subjective.
With many levels, price will often appear to respect one by chance.
Not a standalone signal; needs confirmation.

Strategies that use it

🎢 Pullback Buying in an Uptrend

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FAQ

Is 50% a Fibonacci ratio?

Not technically, but it is included because halfway retracements are commonly watched.

Which swing points should I use?

Use clear, significant highs and lows that most traders would recognize on the chart.

Do Fibonacci levels really work?

They are widely watched, which can make them relevant, but they are not reliable on their own.

Educational only – not financial advice. This page explains ideas and reports the news. It is not a recommendation to buy, sell or hold anything. Markets go up and down and you can lose money. Do your own research and consider talking to a licensed adviser.

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