1. What is Fibonacci Retracement?

Fibonacci retracement is a technical analysis tool used to identify potential support and resistance levels in financial markets. These levels are based on the Fibonacci sequence and its derived ratios.

2. How Does the Calculator Work?

The calculator uses the Fibonacci retracement formula:

Where:

• \( low \) — The swing low price point
• \( high \) — The swing high price point
• \( fib\_ratio \) — The Fibonacci ratio (e.g., 0.236, 0.382, 0.5, 0.618, 0.786)

Explanation: The formula calculates potential reversal levels between a significant high and low point in price.

3. Importance of Fibonacci Levels

Details: Fibonacci retracement levels are widely watched by traders and can indicate where price might find support or resistance during a pullback in an ongoing trend.

4. Using the Calculator

Tips: Enter the significant low and high prices from the price chart, then select a Fibonacci ratio. The calculator will show the corresponding retracement level.

5. Frequently Asked Questions (FAQ)

Q1: What are the most important Fibonacci ratios?
A: The key ratios are 23.6%, 38.2%, 50%, 61.8%, and 78.6%. The 61.8% level (golden ratio) is considered the most significant.

Q2: How do I identify the correct high and low points?
A: Use the most recent significant swing high and swing low that define the current trend you're analyzing.

Q3: Are Fibonacci levels exact reversal points?
A: No, they should be considered as zones rather than precise levels, often used in conjunction with other indicators.

Q4: Can Fibonacci be used in all time frames?
A: Yes, Fibonacci retracement can be applied to any time frame from minutes to monthly charts.

Q5: What markets is Fibonacci retracement used in?
A: It's commonly used in stock, forex, commodity, and cryptocurrency markets.