What is a Fibonacci retracement?
In one line: A Fibonacci retracement is a set of lines, like 38.2%, 50% and 61.8%, showing how far price has pulled back from a move, used to watch for a pause.
A simple example
Price rises from $100 to $120. That's a $20 move. Then it starts to come back down.
A Fibonacci tool measures that pullback as a share of the $20 move:
| Level | Pullback | Price |
|---|---|---|
| 23.6% | $4.72 | $115.28 |
| 38.2% | $7.64 | $112.36 |
| 50% | $10.00 | $110.00 |
| 61.8% | $12.36 | $107.64 |
| 78.6% | $15.72 | $104.28 |
You draw it from the last low ($100) to the last high ($120). The platform marks the levels for you.
Why it matters
In a Trend, price rarely moves in a straight line. It steps forward, then pulls back. A Pullback that pauses around 38.2% to 61.8% and then turns is a common shape.
The levels give you a rough map of where to watch. They work best when they line up with something else on the chart, like an old turning point or Support. Our full guide is Fibonacci retracement explained.
A common mistake
Picking whatever points make the levels fit. Draw from a different low, and every level moves. If you choose the start and end after you see where price turned, the tool will always look right.
Use clear Swing high and swing low points: the last obvious places price turned around. Pick them before you look for a reaction, not after.
The 50% level isn't actually a Fibonacci number. It's included because halfway pullbacks are common and easy to watch.
Questions
Which Fibonacci level is the most important?
Many traders watch 61.8% and 50% most closely. No level is reliable on its own. It matters more when it lines up with an old turning point.
How do you draw Fibonacci retracement in an uptrend?
Start at the low where the move began and drag to the high where it ended. The levels then appear between the two.
Does Fibonacci retracement really work?
It's a way to measure a pullback, not a rule price must follow. Price can stop at any level, or go straight through all of them.
Want the next step? We'll walk you through it.
Four free lessons by email, one every few days — each with a 10-minute exercise on a real chart.
Send Me the Free Lessons 4 short emails · No spam · Unsubscribe anytimeOr see the whole method, step by step:
See What’s Inside the Course Try everything free first. Decide when you're ready. · Open the free chart tool (works in the TradingView phone app)One chart idea a day, in plain English. Follow along: