Price StructureBeginner

Fibonacci Retracement

Maps the natural pullback levels within a trend using mathematical ratios found throughout nature.

4H, Daily, Weekly

Crypto, Forex, Equities, Commodities

Pine Script v5

What is it?

Fibonacci retracement levels are horizontal lines drawn between a significant swing high and swing low (or vice versa) at the key Fibonacci ratios: 23.6%, 38.2%, 50%, 61.8% (the 'golden ratio'), and 78.6%. These levels represent potential support zones during a pullback in an uptrend (or resistance zones during a bounce in a downtrend). The 61.8% level is considered the most significant — it is derived from dividing a Fibonacci number by the next number in the sequence. The 50% level is not a true Fibonacci ratio but is widely watched because markets tend to retrace to the midpoint of a move.

When to use it

Identifying pullback entry levels in a trend: draw from the swing low to swing high in an uptrend; the 38.2%, 50%, and 61.8% levels are potential long entries on the pullback.
Setting profit targets: Fibonacci extension levels (127.2%, 161.8%, 261.8%) project where price may go after completing a retracement.
Confluence zones: a Fibonacci level that coincides with a prior support/resistance level, a moving average, or a VWAP level is a high-probability zone.
Stop placement: place stops just below the next Fibonacci level (e.g. below 61.8% if entering at 50%) to define risk precisely.
Multi-timeframe Fibonacci: draw Fibonacci on the weekly chart to find macro levels, then use the daily chart to time entries within those zones.

Common pitfalls

Fibonacci levels are self-fulfilling to a degree — they work partly because so many traders watch them. In low-liquidity altcoins, this effect is weaker.
The choice of swing high and swing low is subjective. Two traders drawing Fibonacci on the same chart will often get different levels depending on which pivots they choose.
Price rarely stops exactly at a Fibonacci level — it often overshoots by a few percent. Use Fibonacci zones (±1–2% around the level) rather than exact prices.
Fibonacci retracement only works in trending markets. In a sideways market, there is no meaningful swing to draw from.
Traders often draw too many Fibonacci levels from too many swings, creating a chart full of lines where every price level is 'significant.' Use only the most recent major swing.

Free code template

Paste directly into TradingView Pine Editor → Add to chart.

Pine Script v5

/indicator("Fibonacci Retracement — DAI Template", overlay=true)

// Auto-detect swing high/low over lookback period
lookback = input.int(50, "Lookback Period", minval=10)
showExt  = input.bool(true, "Show Extensions")

swingHigh = ta.highest(high, lookback)
swingLow  = ta.lowest(low, lookback)
range_    = swingHigh - swingLow

// Retracement levels
r236 = swingHigh - range_ * 0.236
r382 = swingHigh - range_ * 0.382
r500 = swingHigh - range_ * 0.500
r618 = swingHigh - range_ * 0.618
r786 = swingHigh - range_ * 0.786

// Extension levels
e1272 = swingLow  - range_ * 0.272
e1618 = swingLow  - range_ * 0.618
e2618 = swingLow  - range_ * 1.618

plot(swingHigh, "100% (Swing High)", color=color.new(#94a3b8, 30), linewidth=1, style=plot.style_linebr)
plot(r236,      "23.6%",             color=color.new(#f59e0b, 30), linewidth=1, style=plot.style_linebr)
plot(r382,      "38.2%",             color=color.new(#22c55e, 30), linewidth=1, style=plot.style_linebr)
plot(r500,      "50.0%",             color=color.new(#3b82f6, 50), linewidth=2, style=plot.style_linebr)
plot(r618,      "61.8% (Golden)",    color=color.new(#d97706, 50), linewidth=2, style=plot.style_linebr)
plot(r786,      "78.6%",             color=color.new(#ef4444, 30), linewidth=1, style=plot.style_linebr)
plot(swingLow,  "0% (Swing Low)",    color=color.new(#94a3b8, 30), linewidth=1, style=plot.style_linebr)

plot(showExt ? e1272 : na, "127.2% Ext", color=color.new(#a78bfa, 40), linewidth=1, style=plot.style_linebr)
plot(showExt ? e1618 : na, "161.8% Ext", color=color.new(#a78bfa, 50), linewidth=2, style=plot.style_linebr)
plot(showExt ? e2618 : na, "261.8% Ext", color=color.new(#a78bfa, 40), linewidth=1, style=plot.style_linebr)

// Alert when price enters golden ratio zone
nearGolden = math.abs(close - r618) / r618 < 0.01
alertcondition(nearGolden, "Near 61.8% Fib", "Price within 1% of 61.8% Fibonacci level")