1. What Are Fibonacci Retracement Levels?

Fibonacci retracement levels are horizontal lines that indicate where support and resistance are likely to occur. They are based on Fibonacci numbers and ratios (23.6%, 38.2%, 50%, 61.8%, and 100%) that are key levels in technical analysis of financial markets.

2. How Does the Calculator Work?

The calculator uses the standard Fibonacci retracement formula:

Where:

• \( High \) — The peak price in the selected range
• \( Low \) — The trough price in the selected range
• \( Range \) — The difference between High and Low
• \( Fibonacci Ratio \) — 0.236, 0.382, 0.5, or 0.618

Explanation: The levels are calculated by taking the price range and multiplying it by the key Fibonacci ratios, then subtracting these values from the high price.

3. Importance of Fibonacci Levels

Details: Fibonacci retracement levels are widely used in technical analysis to identify potential reversal points in financial markets. Traders watch these levels for potential support during pullbacks or resistance during rallies.

4. Using the Calculator

Tips: Enter the high and low prices of the price swing you're analyzing. The calculator will show the key Fibonacci retracement levels between these two points.

5. Frequently Asked Questions (FAQ)

Q1: Why are Fibonacci levels important in trading?
A: These levels often coincide with psychological support/resistance levels where traders place orders, making them self-fulfilling prophecies.

Q2: Which Fibonacci level is most significant?
A: The 61.8% level (the "golden ratio") is considered the most important, followed by 38.2%. The 50% level, while not a true Fibonacci ratio, is also widely watched.

Q3: How should I select the high and low points?
A: Choose clear swing highs and swing lows on the chart - the most recent significant peak and trough in the price movement you're analyzing.

Q4: Do Fibonacci levels work in all time frames?
A: They can be applied to any time frame from minutes to months, but generally work best on longer time frames where more traders are watching the same levels.

Q5: Are Fibonacci levels reliable?
A: While not perfect, they provide a framework for understanding potential reversal points when combined with other technical indicators and price action signals.