1. What Are Fibonacci Levels in Stocks?

Fibonacci retracement levels (23.6%, 38.2%, 61.8%) are horizontal lines that indicate potential support and resistance levels based on Fibonacci numbers. Traders use these levels to identify strategic places for transactions, stop losses, or target prices.

2. How Does the Calculator Work?

The calculator uses the Fibonacci retracement formula:

Common Fibonacci ratios used:

• 23.6% (0.236)
• 38.2% (0.382)
• 50.0% (0.5) - Not a true Fibonacci ratio but commonly used
• 61.8% (0.618) - The "golden ratio"

3. Importance of Fibonacci Retracement

Details: Fibonacci retracement levels help traders identify potential reversal points in the price of a stock. These levels are widely watched and can become self-fulfilling prophecies as many traders place orders at these levels.

4. Using the Calculator

Tips: Enter the high and low prices of the stock's recent significant move. The calculator will show key Fibonacci retracement levels between these two points.

5. Frequently Asked Questions (FAQ)

Q1: Why are Fibonacci levels important in trading?
A: They help identify potential support/resistance levels where price might reverse or consolidate.

Q2: Which Fibonacci levels are most significant?
A: The 38.2% and 61.8% levels are most watched, with 50% being a psychological level.

Q3: How do I choose the high and low points?
A: Use the most recent significant swing high and swing low on the chart you're analyzing.

Q4: Do Fibonacci levels work for all time frames?
A: They can be applied to any time frame, but are generally more reliable on longer time frames.

Q5: Should I trade solely based on Fibonacci levels?
A: No, they should be used in conjunction with other technical indicators and analysis methods.