How Fibonacci levels are calculated
Range = Swing high − Swing low.
Uptrend retracement = High − Range × Ratio
Uptrend extension = Low + Range × Ratio
Downtrend retracement = Low + Range × Ratio
Downtrend extension = High − Range × RatioRetracement ratios: 23.6%, 38.2%, 50%, 61.8%, 78.6%. Extension ratios: 127.2%, 161.8%, 200%, 261.8%.
Worked example
A stock rallies from ₹1,000 to ₹1,200. The 38.2% retracement is 1,200 − 200 × 0.382 = ₹1,123.60, the 50% level ₹1,100 and the 61.8% level ₹1,076.40. A trader might buy a pullback to ₹1,076–1,124 with a stop below ₹1,000, targeting the 161.8% extension at ₹1,323.60.
Frequently asked questions
Which Fibonacci levels matter most?
The 38.2%, 50% and 61.8% retracements are the most watched. 61.8% is often called the “golden ratio” level. 50% is not a Fibonacci ratio but is included because markets frequently retrace half a move.
How do I pick the swing high and low?
Use the most recent clear swing: in an uptrend, the low where the move started and the high where it ended. Different traders choose different swings, so levels that line up with support, resistance or moving averages are more reliable.
What are Fibonacci extensions used for?
Extensions project where a move might go after the retracement ends. Traders use 127.2%, 161.8% and 261.8% as profit targets.
Results are estimates for educational purposes only and are not investment, tax or financial advice. Verify figures with your broker or advisor before acting on them.