Fibonacci Retracement & Extension Calculator

What are Fibonacci Retracements?

Fibonacci retracements are a technical analysis tool based on the golden ratio, a mathematical relationship discovered by Leonardo Fibonacci in the 13th century. The golden ratio (approximately 1.618) and its related percentages appear repeatedly in nature, art, and architecture — and traders have found that these same proportions frequently show up in financial markets.

In trading, Fibonacci retracement levels are horizontal lines drawn on a price chart to indicate areas where support or resistance is likely to occur. They are calculated by taking two extreme price points — a significant high and low — and dividing the vertical distance between them by key Fibonacci ratios: 23.6%, 38.2%, 50%, 61.8%, and 78.6%.

These levels act as magnets for price action because so many traders watch them. When a stock or currency pair pulls back from a strong move, traders look to Fibonacci levels to identify where the pullback might end and the original trend could resume.

How to Use Fibonacci Levels in Trading

To use Fibonacci levels effectively, start by identifying a clear trend on your chart — either a strong upward or downward price movement. Then apply the Fibonacci retracement tool from the swing low to the swing high (in an uptrend) or from the swing high to the swing low (in a downtrend).

Here are practical ways traders use these levels:

• Entry points: Wait for price to pull back to a key Fibonacci level (38.2%, 50%, or 61.8%) and look for confirmation signals such as candlestick patterns, volume spikes, or momentum indicator divergence before entering a trade in the direction of the trend.
• Stop-loss placement: Place your stop-loss just beyond the next Fibonacci level. For example, if you enter a long trade at the 38.2% retracement, consider placing your stop below the 50% or 61.8% level.
• Profit targets: Use Fibonacci extension levels (127.2%, 161.8%, 261.8%) to set realistic profit targets when a trend is expected to continue beyond the previous swing high or low.
• Confluence zones: Fibonacci levels become more powerful when they align with other forms of support and resistance, such as moving averages, trendlines, or previous price structure. These confluence zones offer the highest-probability trade setups.

Key Fibonacci Levels Explained

While all Fibonacci levels have value, three stand out as the most significant for traders:

• 38.2% Retracement: This is often the first meaningful support or resistance level during a strong trend. Shallow pullbacks to the 38.2% level suggest that the trend still has significant momentum. Traders with aggressive strategies frequently enter at this level.
• 50% Retracement: Although 50% is not a true Fibonacci number, it is included because markets historically tend to retrace about half of a prior move before continuing. The 50% level serves as a psychological midpoint and is widely monitored by both institutional and retail traders.
• 61.8% Retracement: Known as the golden ratio, this is widely considered the most important Fibonacci level. A pullback to the 61.8% retracement often represents the last line of defense for the prevailing trend. If price holds here, it is a strong signal that the trend will resume. If it breaks through, a deeper correction or trend reversal may be underway.

For a deeper dive into building a complete trading strategy around these levels, learn more in our Fibonacci Strategy Guide.