For Business

Trends & Market Structure

What Is a Fibonacci Retracement

A Fibonacci retracement treats the last move as a ruler and marks it at 23.6, 38.2, 50 and 61.8 percent of the way back, so that a pullback can be read as a share of the move it retraces. This paper shows you the marks drawn on the euro's 2025 rise from its turning points, where the numbers come from, the marks as lines on the daily chart, the marks as prices and pips, and where the tool lives on your platform.

Difficulty
Beginner
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

This paper is locked

Read it in the browser and keep the PDF with Premium, or buy this one paper.

Buy this paper — $1Get Premium

A ruler with four marks

A Fibonacci retracement treats the last move as a ruler. The euro against the dollar rose from 1.01771 on 13 January 2025 to 1.18295 on 1 July, and on that ruler 0 percent is the high, 100 percent is the low, and four marks are drawn between them at 23.6, 38.2, 50 and 61.8 percent of the way back. Each mark is a price: 1.14395, 1.11983, 1.10033 and 1.08083. The pullback low of 1 August, 1.13916, sat between the first two marks, 26.5 percent back.

Where the numbers come from

The marks are named after a sequence of numbers in which each one is the sum of the two before it: 1, 1, 2, 3, 5, 8, 13, 21. Drawn as squares of those sizes they tile a rectangle, and any number divided by the next comes closer and closer to 0.618. That is the 61.8 percent mark. 0.618 times itself is 0.382, and 0.382 times 0.618 is 0.236, the other two. The 50 percent mark is not from the sequence at all; it is added because halfway is a natural place to look.

This paper is locked

Read next