How much of the move is given back?Ratios mark the likely track.
A technical analysis tool that draws horizontal lines across a price move at fixed fractions of its height, most often 23.6%, 38.2%, 50% and 61.8%, which chart users watch as levels where a pullback might pause.
The 50% level is drawn by convention and is not a Fibonacci ratio, and prices frequently pass straight through any of the levels.
In plain words
A Fibonacci retracement is a set of horizontal lines drawn across a price move at fixed fractions of its height, most often 23.6%, 38.2%, 50% and 61.8%. The fractions other than 50% come from ratios between numbers in the Fibonacci sequence. The lines mark how much of the move a pullback has given back.
See it move
Price has reached 50% level
Why it matters
Many chart users watch these levels as places where a pullback might pause, and that shared attention is the main reason they matter. There is no economic law behind them, and prices frequently pass straight through.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
An invented pair rises from 1.1000 to 1.1200 and then pulls back.
- 1Height of the move = 1.1200 − 1.1000 = 0.0200 = 200 pips
- 238.2% level = 1.1200 − 0.382 × 0.0200 = 1.11236
- 350% level = 1.1200 − 0.5 × 0.0200 = 1.1100
- 461.8% level = 1.1200 − 0.618 × 0.0200 = 1.10764
A pullback to 1.1100 has given back half of the rise; the levels describe how deep a pullback is and predict nothing.
A common mistake
The 50% level is commonly listed with the others, but it is not a Fibonacci ratio. It is included by convention.
Check yourself
Learn more
- Academy lessonFibonacci retracementHow Fibonacci retracement levels are derived and drawn, what each level is conventionally taken to mean, and how extensions and clusters build on them.
- ExplainerThe golden ratio in technical analysis: how Fibonacci tools are builtRetracements, extensions, fans and time zones all come from one number, 1.618. This is how each tool is constructed, how traders read it, and where its limits lie.
- ExplainerFibonacci extensions: how the levels are calculatedExtensions project a prior swing beyond its end using the same ratios as retracements. A worked EUR/USD example shows where each level comes from.
Educational information, not investment advice or a recommendation to trade.