Fibonacci Retracement
NeutralReliability: LowAlso called · retracement, fib
A tool that watches for pullbacks at set ratios (0.382 / 0.5 / 0.618) of a move.
How to spot it
- Anchor it to the start and end of a meaningful swing
- The 0.618 area is used most often
Why this shape forms
It pre-marks the ratios where pullbacks often stop. The numbers are not magic; what works is that many people watch the same lines.
Where it actually means something
Draw it after one clear directional move has finished. Applied to a range it looks like price stops at every line.
What else to check
Look for fib levels that overlap existing support or resistance. A fib line with nothing else on it is weak evidence.
This means you're wrong
Beyond the start of the prior swing it isn't a retracement — it's a trend change.
The mistake beginners make
Drawing it anywhere and only remembering the times it worked.
Easy to confuse with
Which high and low you anchor to changes every line. Moving the anchor until the result fits is not analysis.
Real examples from the community
Patterns are probabilistic tendencies, not guarantees. This is not investment advice.