Technical analysis
How do I draw Fibonacci retracement levels correctly from swing high to swing low?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Fibonacci retracements are drawn from a confirmed swing high to swing low (or vice versa), plotting ratios like 38.2%, 50%, and 61.8% as potential areas where price may pause or reverse.
How it works
Correct application requires selecting a clear, significant swing on your chosen timeframe; drawing from arbitrary or minor swings produces less meaningful retracement levels for anticipating pullback support or resistance.
An example
After a stock rallies from $40 to $60, a trader might watch the 50% retracement near $50 as a possible support area during a pullback.
Risk & limitations
Fibonacci levels are not guaranteed turning points and work best combined with other confirming technical signals like volume or candlestick patterns.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.