After a strong move, price usually retraces part of it before continuing. The Fibonacci retracement tool marks the likely stopping points.
Drawing it in an uptrend
Click the swing low, drag to the swing high. The levels appear between them as possible support.
Drawing it in a downtrend
Click the swing high, drag to the swing low. The levels become possible resistance.
Which levels matter most?
- 38.2%: shallow pullback in a strong trend.
- 50% and 61.8%: the classic sweet spot.
- 78.6%: deep pullback; last line before the move is in question.
Wick says
Fib levels are "maybe here" zones, not "definitely here" lines. Wait for price to show you something (a pin bar, an engulfing) before you act.
Rookie mistake
Drawing from random points. Use the obvious swing high and low that everyone else can see.
Key takeaways
- Uptrend: draw low to high. Downtrend: draw high to low.
- 50–61.8% is the most-watched pullback zone.
- Combine fib levels with candle signals for entries.