Fibonacci Retracement Levels — what it is and how to use it in trading
Definition
Fibonacci levels are five horizontal levels built from the classic Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, 78.6%) of the last significant ZigZag move, marking possible retracement and reversal zones within that move.
How it works in the builder
The fib_236, fib_382, fib_500, fib_618, and fib_786 operands take a confirm_bars parameter (default 3, inherited from the underlying ZigZag) and each represent that percentage retracement of the last confirmed ZigZag move. fib_236 (23.6%) is a shallow retracement, typical of a strong trend with no serious pause. fib_382 (38.2%) is a moderate retracement. fib_500 (50%) is the classic "halfway point" of the move (not strictly a Fibonacci ratio, but traditionally included in the set). fib_618 (61.8%, the golden ratio) is the key, most-watched level, often a "healthy" pullback depth before the trend resumes. fib_786 (78.6%) is a deep retracement, often treated as a zone beyond which the trend is already in question.
What it looks like on the chart
Drawn as a price move (an impulse followed by a partial pullback) with all five levels plotted at once — the spacing between levels is genuinely proportional to their ratios (shallower near the top, deeper near the bottom), not arbitrary. The selected level is highlighted as a bold, labelled line, the other four as thin, muted ones.
Typical use
A price reaction (a bounce or a break) at a specific level is often used as an entry filter, for example: low crossed_below fib_618 combined with a bullish reversal candle — an entry on a classic golden-ratio pullback.
Common pitfalls
Because the levels are built from the underlying ZigZag, their exact position depends on which move counts as "the last one" — confirm_bars changes which points anchor the retracement, and two runs with a different confirm_bars can show noticeably different levels. Touching a level by itself does not guarantee a reaction: in a strong trend, price often blows straight through several levels without stopping.
This block is available in the strategy builder
137 no-code blocks — build an entry condition with this term and test it on history
Historical results do not guarantee future ones. The service is an informational and analytical tool, not an individual investment recommendation; trades are not executed.
Fib 61.8%
Block variants
Fib 23.6%
Fib 38.2%
Fib 50%
Fib 78.6%