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Concept

Fibonacci Retracement

Map pullback zones within a trend where liquidity and positioning concentrate — a confluence tool, not a standalone entry signal.

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Key Takeaways

Maps percentage retracements of a prior move.
2% moderate, 50% midpoint, 61.
8% deep, and 100% full.
Identifies areas where price may find support or resistance during corrections.
Used as a confluence tool alongside structure, order flow, and volatility.

What It Measures

Maps percentage retracements of a prior move.
Key levels are 23.
2% moderate, 50% midpoint, 61.
8% deep, and 100% full.
Identifies areas where price may find support or resistance during corrections.

Institutional Use

Used as a confluence tool alongside structure, order flow, and volatility.
Levels work because they are widely watched, creating concentrated liquidity.
The edge is in how price behaves at these levels, not the levels themselves.

Key Signals

Shallow retracement between 23.
2% signals strong trend with high continuation probability.
Moderate retracement at 50% signals balanced correction.
Deep retracement at 61.
8% signals weakening trend or strong reversal zone.
8% suggests potential trend reversal.

Trading Playbook

Trend continuation: enter at 38.
8% pullback with structural and momentum confirmation.
Stop below prior swing low.
Target at prior high or extension levels.
Higher probability when Fibonacci aligns with prior structure levels.

When Not to Trade

Do not trade Fibonacci levels in isolation.
Avoid in range-bound markets without clear impulse moves to measure from.