Fibonacci Swing
Fibonacci Swing anchors retracement and extension levels to an automatically detected swing high and swing low, giving proportional support and resistance ratios (0.382, 0.5, 0.618, 1.272, 1.618) at every stage of a move.
What it measures
The indicator identifies the most recent significant swing (high-to-low in a downtrend, low-to-high in an uptrend) and projects the classical Fibonacci ratios across it. Retracements sit inside the swing (0.236–0.786); extensions sit outside (1.272, 1.618, 2.618) and act as reversion or target levels for the next leg.
Parameters
| Name | Default | Range | Note |
|---|---|---|---|
| swing_lookback | 50 | 20–200 | Bars to search for the swing high/low. Longer windows anchor to more significant structure but respond slowly to regime changes. |
| levels | 0.236, 0.382, 0.5, 0.618, 0.786 | configurable | 0.618 (the "golden ratio") is the most-watched retracement; 0.5 is a psychological level, not strictly Fibonacci but widely included. |
How it behaves
In trending markets, price typically retraces to 0.382 or 0.5 before resuming — 0.618 is a deeper "last chance" retracement, and pullbacks past 0.786 usually indicate the trend has broken. Extensions (1.272, 1.618) are common profit targets for continuation trades.
When it misleads
Fibonacci levels only work when the underlying swing is meaningful — projecting ratios across a noise wiggle produces levels that describe nothing. The other failure is self-inflicted: traders redraw the swing every time price does something unexpected, so "the 0.618 held" becomes unfalsifiable. Commit to a swing; if that swing is invalidated (price breaks the anchoring low or high), the whole Fibonacci grid is invalid, not just retuned.
Backtest result
Sourced backtest in preparation — we're running the rule on our own historical candles before publishing numbers we can stand behind.
FAQ
- Why does Fibonacci "work" in markets?
- It probably doesn't work because of any deep mathematical property — it works because a critical mass of traders watch the same 0.382/0.5/0.618 levels, so orders cluster there. Self-fulfilling, not natural law.
- Which Fibonacci level is most important?
- 0.618 is the most-watched and most-cited; 0.5 (the half-back) is culturally the second. Together they define the "sweet zone" where most textbook pullback entries sit.
- Should I use Fibonacci alone?
- No. On its own it produces a lot of levels and many will be tested. Combine with a trend filter, order-block confluence, or a candlestick trigger at the level for higher-quality signals.
Build a strategy with Fibonacci
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