What are Fibonacci Levels?
Fibonacci levels are horizontal lines that indicate potential support and resistance levels based on
the Fibonacci sequence. These ratios (23.6%, 38.2%, 50%, 61.8%, 78.6%) appear frequently in nature
and financial markets.
Key Fibonacci Ratios
23.6%
Shallow retracement, strong trend
38.2%
Common first target
50%
Psychological level
61.8%
Golden ratio, key level
78.6%
Deep retracement
Trading with Fibonacci
Retracement Levels (Pullback Trading)
- Used to identify potential entry points during pullbacks
- 38.2% and 61.8% are the most watched levels
- Combine with other indicators for confirmation
- Place stop loss beyond the 78.6% or 100% level
Extension Levels (Profit Targets)
- 161.8% - First major profit target
- 261.8% - Extended target for strong trends
- 423.6% - Rare but possible in very strong trends
- Use multiple timeframes for confluence
⚠️ Important: Fibonacci levels work best when combined with other forms of analysis
like support/resistance, trend lines, and candlestick patterns. Never rely on Fibonacci alone.