Enter a swing high and swing low to get the main Fibonacci retracement levels (23.6 to 78.6 percent) and extension levels (127.2 to 261.8 percent) for an uptrend or downtrend.
How Fibonacci levels are calculated
Retracement levels sit inside a price move and show where a pullback may stop. Extension levels sit beyond the move and show where the next leg may reach.
Formulas
- Range = swing high minus swing low.
- Uptrend retracement = high minus range × ratio (0.236, 0.382, 0.5, 0.618, 0.786).
- Uptrend extension = low + range × ratio (1.272, 1.618, 2.0, 2.618).
- For a downtrend the directions are reversed.
Worked example
EUR/USD rises from 1.0800 to 1.1200, a range of 400 pips. The 61.8 percent retracement is 1.1200 minus 0.0247 = 1.0953. The 161.8 percent extension, measured from the low, is 1.0800 + 0.0647 = 1.1447.
Where the ratios come from
The ratios come from the Fibonacci sequence, where each number is the sum of the two before it. Dividing one number by the next approaches 0.618, the golden ratio. Learn more in Elliott Wave and Fibonacci.
Frequently asked questions
What is the most important Fibonacci level?
Many traders watch the 61.8 percent retracement most closely, along with the 50 percent level.
What is the difference between retracement and extension?
A retracement is a level inside the prior move. An extension is a level beyond it.
Do Fibonacci levels always work?
No. They are areas to watch, not guarantees. Use them with structure and a stop loss.
Results are estimates for education and planning. Check contract specifications and costs with your broker before you trade. Disclaimer.
