Fibonacci Retracements & Extensions

The Fibonacci Sequence

0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55... Each number is the sum of the previous two. The ratio of consecutive numbers approaches φ = 1.618 (golden ratio).

Key Fibonacci Levels

• Retracement: 23.6%, 38.2%, 50%, 61.8%, 78.6%
• Extension: 127.2%, 161.8%, 200%, 261.8%

How to Draw

• Uptrend: Anchor at swing low, drag to swing high. Levels appear between.
• Downtrend: Anchor at swing high, drag to swing low.

Trading with Fibs

• 61.8% retracement is the "golden pocket" — deep pullback in a strong trend.
• 50% isn't a true Fib but widely watched.
• 1.618 extension = classic price target after breakout.

Confluence

Fibs are most powerful when they overlap with:

• Round numbers (₹1000, ₹5000)
• Prior support/resistance
• Moving averages (50-, 200-day)
• Trendlines

Warning

Fibs are self-fulfilling to some degree — many traders use them. But they are guidelines, not physical laws.