Fibonacci retracements and extensions

Indicators that matter · Intermediate · 7 min read

You will learn to

Draw a retracement correctly
The levels people watch
Extensions for targets

Drawing it

Pick a clear swing — low to high for an uptrend. The tool marks the 23.6%, 38.2%, 50%, 61.8% and 78.6% retracements of that move. Pullbacks in healthy trends often pause between 38.2% and 61.8%.

Why it can work

There is nothing magic in the ratios. They matter because many traders watch them, and because a pullback of about half a move is simply a normal size. Treat each level as a zone and look for confluence: a 61.8% that lines up with old resistance and the 50 EMA is worth more than a lone Fibonacci line.

Extensions

The 127.2% and 161.8% extensions of a swing project where the next leg might reach — useful as targets, not as reversal points to short.

The drawing toolbar has Fib retracement (Alt + F) and Fib extension; the Confluence indicator includes the latest swing's 38.2 / 50 / 61.8%.

Check yourself

1. In an uptrend, where do you anchor a retracement?

From the swing low to the swing high ✓
From the high to the next high
Anywhere

Low to high measures the move being retraced.

2. Why do Fibonacci levels sometimes work?

Nature's ratio controls markets
Many traders watch them and half-move pullbacks are normal ✓
Exchanges enforce them

Self-fulfilling attention plus normal pullback depth — no magic.

Terms in this lesson

Extension: Projection of a swing beyond its end (127.2%, 161.8%) for targets.
Fibonacci retracement: The 38.2 / 50 / 61.8% pullback levels of a swing.

Practise it on real charts. In the app, this lesson comes with real examples (reveal what happened next), a graded drill and the track test. Open the Academy in NexusCore — free →