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 78.6%) that traders use to identify potential reversal levels.

2. How Does the Calculator Work?

The calculator uses the following formula for each Fibonacci level:

Where:

• High — The highest price in the selected range
• Low — The lowest price in the selected range
• Fibonacci Ratio — 0.236, 0.382, 0.5, 0.618, or 0.786

3. Importance in Day Trading

Details: Fibonacci retracement levels help traders identify potential support/resistance areas where price might reverse or consolidate. These levels are widely watched by traders and often become self-fulfilling prophecies.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Which Fibonacci levels are most important?
A: The 38.2%, 50%, and 61.8% levels are most commonly watched by traders, with the 61.8% level often considered the most significant.

Q2: Should I trade solely based on Fibonacci levels?
A: No, Fibonacci levels should be used in conjunction with other technical indicators and price action analysis.

Q3: How do I choose the high and low points?
A: Select the most recent significant swing high and swing low in the price chart you're analyzing.

Q4: Do Fibonacci levels work in all time frames?
A: They can be applied to any time frame, but are generally more reliable on higher time frames (1-hour charts and above).

Q5: What about Fibonacci extensions?
A: This calculator focuses on retracement levels. Fibonacci extensions (1.272, 1.618, etc.) are used for projecting potential price targets.