Levels and Fibonacci on the chart

A horizontal level is drawn through a price where the market has already turned several times: through bounce lows for support, through highs for resistance. It is a zone, not an exact line.

Fibonacci retracement levels divide a notable move into parts: 23.6%, 38.2%, 50%, 61.8% and 78.6%. The 50% level does not come from Fibonacci numbers, but it is traditionally added. They are drawn from the start of the move to its end: for a rise, from the low to the high; for a fall, from the high to the low.

The calculation for a rise from A to B: retracement level X = B − (B − A) × X. A hypothetical example: a move from 100 to 200, the 61.8% level = 200 − 100 × 0.618 = 138.2.

An honest word on these levels’ strength: there is no convincing evidence that Fibonacci numbers have special power over the price. It is a way to mark zones where a pullback may stop, and the reaction to them is partly explained by the fact that many traders watch them. A stronger zone is where a Fibonacci level coincides with a horizontal level or an old low.

In practice, a trade from a level is a plan with a condition: entry near the zone, stop beyond the zone (not exactly on the line), target at the next level. The price often cuts right through levels, and the stop allows for that.

In Market Replay both tools are on the panel above the chart: “Level” is placed with one click, “Fibonacci” you drag from the start of the move to its end.