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CRFibonacci Tool Settings | Fibonacci Golden Zone Explained – 61.8% to 78.6% | Fibonacci Retracement
What is Fibonacci Retracement?
Fibonacci Retracement is a technical analysis tool used to identify potential reversal or continuation zones in price movement.
It is based on the Fibonacci sequence — a natural mathematical ratio found throughout nature, art, and markets.
In trading, these ratios help traders measure how much of a prior move the price might retrace before continuing in the direction of the trend.
🔹 Common Fibonacci Levels
The key Fibonacci retracement levels are:
0.236 (23.6%)
0.382 (38.2%)
0.5 (50%) (not a Fibonacci ratio but widely used)
0.618 (61.8%)
0.786 (78.6%)
These levels act as potential support (in a down retrace) or resistance (in an up retrace) zones.
🔹 How to Use Fibonacci Retracement
You can use Fibonacci retracement in trending markets — either bullish or bearish.
1. Identify the Trend
If the market is in an uptrend, draw the Fibonacci tool from the swing low → swing high.
If the market is in a downtrend, draw it from the swing high → swing low.
2. Wait for a Retracement
After a strong impulse move, the market often pulls back to one of the Fibonacci levels (usually 38.2%, 50%, or 61.8%).
These retracements are where smart money looks for entries.
3. Look for Confluences
Combine Fibonacci levels with:
Fair Value Gaps (FVG)
Breaker Blocks / Order Blocks
Liquidity pools
Premium vs. Discount zones
BOS (Break of Structure)
The stronger the confluence, the higher the probability of a valid setup.
4. Entry and Confirmation
Look for entry patterns (e.g., bullish engulfing candle, CHoCH) at a Fibonacci level.
Confirmation may also come from volume spikes or imbalance fills.
Example:
In a bullish trend:
If price rallies from 1.2000 to 1.2300, then retraces back to 1.2180 (61.8%),
and forms a bullish rejection candle — that’s a potential buy entry zone.
🔹 ICT/SMC Style Use of Fibonacci
ICT traders often divide the range into:
Premium zone (Above 50%) → Look for Sell Setups
Discount zone (Below 50%) → Look for Buy Setups
Price usually seeks liquidity around these levels before making a reversal or c
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