Fibonacci Retracement

Fibonacci retracement is a technical analysis tool that uses horizontal lines to indicate potential support and resistance levels based on Fibonacci ratios of 23.6, 38.2, 50, 61.8, and 78.6 percent. Traders draw retracements from swing highs to swing lows (or vice versa) to identify where pullbacks within a larger trend might find support or resistance before continuing in the original direction.

The ratios come from the Fibonacci sequence (1, 1, 2, 3, 5, 8, 13...) where each number is the sum of the two preceding it. The key retracement percentages are derived from relationships between these numbers. The 61.8 percent ratio is often called the "golden ratio" and tends to be the most watched retracement level. The 38.2 percent level frequently acts as support in strong trends, while 50 percent (not an actual Fibonacci ratio but widely used) and 61.8 percent retracements mark deeper pullbacks that often precede trend continuation.

For example, if EUR/USD rallied from 1.0800 to 1.0900 (100 pip swing) and then pulled back, the key Fibonacci levels would be 1.0876 (23.6 percent), 1.0862 (38.2 percent), 1.0850 (50 percent), 1.0838 (61.8 percent), and 1.0821 (78.6 percent). A trader looking to buy the pullback might place a buy limit at 1.0840 near the 61.8 percent level with a stop below the 78.6 percent at 1.0815 (25 pips) and target at 1.0950 (110 pips), producing a 1:4.4 risk-reward.

In copy trading, Fibonacci levels are part of the broader technical framework informing the master strategy. SteadyFlowFX's 9 algorithms may identify Fibonacci retracements as one of several factors in entry decisions across the 8 currency pairs. The verified Myfxbook 71.3 percent win rate and 1.73 profit factor reflect entries that often respect significant technical levels including Fibonacci zones. Understanding Fibonacci helps subscribers see why certain pullback entries cluster at specific retracement levels.