Technical Analysis

Fibonacci Retracements and Extensions

Fibonacci levels identify potential reversal zones within trends — most powerful when confluent with S/R.

Key rules

  1. Draw from significant swing low to swing high (or reverse)
  2. 61.8% is the Golden Ratio — most reliable reversal zone
  3. 38.2% and 50% are common shallow retracement entries
  4. Extensions (127.2%, 161.8%) provide take-profit targets
  5. Confluence with S/R or MAs strengthens the level

Fibonacci retracements project key ratio levels from swing to swing: 23.6%, 38.2%, 50%, 61.8%, 78.6%. The 61.8% (Golden Ratio) is historically the most significant reversal zone.

Fibonacci extensions (127.2%, 161.8%) project take-profit targets beyond the original swing. These levels are most reliable when they confluent with horizontal S/R or moving averages.

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