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Key Takeaways

Difficulty:Intermediate
Reliability:Moderate
Category:advanced
Timeframes:1H, 4H, Daily

Fibonacci Retracements

advancedšŸ“Š 1H, 4H, Daily, Weekly

Horizontal lines at key Fibonacci ratios identifying potential support/resistance levels.

Formula

Code
Retracement Level = High - [(High - Low) Ɨ Fibonacci Ratio]
Key Ratios: 23.6%, 38.2%, 50%, 61.8%, 78.6%

Detailed Explanation

Fibonacci retracements use horizontal lines to indicate potential support and resistance levels based on the Fibonacci number sequence.

**Key Levels:** - 23.6%: Shallow retracement - 38.2%: Common in strong trends - 50%: Psychological level (not Fibonacci but widely used) - 61.8%: Golden ratio, most significant - 78.6%: Deep retracement before trend failure

Parameters

Swing Low
Default: Manual
Starting point of measurement
Swing High
Default: Manual
Ending point of measurement

šŸ“ˆ Bullish Signals

Price bounces off 38.2%, 50%, or 61.8% retracement in uptrend

šŸ“‰ Bearish Signals

Price rejected at 38.2%, 50%, or 61.8% retracement in downtrend

Python Implementation

Manual Fibonacci level calculation

Python
def fibonacci_levels(high, low, is_uptrend=True):
diff = high - low
levels = {
'0%': high if is_uptrend else low,
'23.6%': high - diff * 0.236 if is_uptrend else low + diff * 0.236,
'38.2%': high - diff * 0.382 if is_uptrend else low + diff * 0.382,
'50%': high - diff * 0.5 if is_uptrend else low + diff * 0.5,
'61.8%': high - diff * 0.618 if is_uptrend else low + diff * 0.618,
'78.6%': high - diff * 0.786 if is_uptrend else low + diff * 0.786,
'100%': low if is_uptrend else high,
}
return levels

TradingView Pine Script

Try on TradingView
JavaScript
//@version=5
indicator("Fib Levels", overlay=true)
// Note: TradingView has built-in Fibonacci drawing tools
// This shows manual calculation
high_point = ta.highest(high, 50)
low_point = ta.lowest(low, 50)
diff = high_point - low_point
fib_618 = high_point - diff * 0.618
plot(fib_618, "61.8%", color=color.orange)
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MT5 MQL5 Code

C++
// Fibonacci is typically drawn manually in MT5
// Or calculated programmatically:
double high = iHigh(_Symbol, _Period, iHighest(_Symbol, _Period, MODE_HIGH, 50, 0));
double low = iLow(_Symbol, _Period, iLowest(_Symbol, _Period, MODE_LOW, 50, 0));
double fib_618 = high - (high - low) * 0.618;

Common Mistakes

āœ—Drawing from wrong swing points
āœ—Expecting exact bounces at levels
āœ—Not confirming with other analysis

Confirmation Signals

Candlestick patterns at levels
Volume
Other indicators

Best For

Support/resistance identificationPullback targetsExtension targets

šŸ’” Pro Tips

  • ā€¢61.8% (golden ratio) is the most significant level
  • ā€¢Combine with other support/resistance for confluence
  • ā€¢Extensions (127.2%, 161.8%) provide profit targets
Last updated: December 29, 2024

Educational Disclaimer

This content is for educational purposes only and does not constitute financial or investment advice. Trading involves significant risk and you may lose your capital. Always consult a licensed financial advisor before making investment decisions.

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