Price action and chart patterns
Fibonacci retracement levels
Levels drawn over the last impulse (38.2%, 50%, 61.8%) that show how deep a pullback is.
Why it works
In a healthy trend, pullbacks often stop between 50% and 61.8% of the previous move: the “golden zone” where value meets the trend.
How to use it
Draw Fibonacci from the swing low to the swing high of the last impulse. Look for buys in the 50–61.8% zone with a confirmation candle.
The typical mistake
Drawing Fibonacci on random swings until a level fits. Use the clear, recent impulse only.
FAQ
What is Fibonacci in trading?
Levels drawn over the last impulse (38.2%, 50%, 61.8%) that show how deep a pullback is.
How do you trade Fibonacci?
Draw Fibonacci from the swing low to the swing high of the last impulse. Look for buys in the 50–61.8% zone with a confirmation candle.