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Fibonacci retracements and extensions

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Die Fibonacci-Spirale zeigt, wie Ordnung aus Wiederholung entsteht. Genau dieses Prinzip findet sich auch an den Märkten wieder – Trends, Korrekturen und Projektionen folgen oft erstaunlich ähnlichen Proportionen.

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Technical analysis offers traders numerous tools to better understand price movements and make informed decisions. Among the best-known and most fascinating tools are Fibonacci retracements and Fibonacci extensions.

Der Ursprung der Fibonacci-Zahlen

The name Fibonacci comes from Leonardo Fibonacci, a 13th-century Italian mathematician. He discovered a sequence of numbers in which each number is the sum of the two preceding ones: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89,…

The special thing is: when you divide a number in the sequence by its predecessor, the result gets closer and closer to the golden ratio:

  • 55 ÷ 34 ≈ 1.6176
  • 89 ÷ 55 ≈ 1.6181

The value 61.8% is the reciprocal of the golden ratio:

  • 1/1.618 ≈ 0.618 = 61.8%

This relationship can be found not only in mathematics, but also in nature, architecture and art – for example in plant structures, shells or historical buildings.

Other important derivations are 23.6%, 38.2%, 50.0%, 78.6%. These ratios form the basis of Fibonacci analysis in trading.

Fibonacci numbers were first introduced into stock market analysis by Charles Dow in the early 20th century. Later, they were further developed by Ralph Nelson Elliott and firmly established in technical analysis.

Fibonacci retracements – measuring corrections within a trend

Fibonacci retracements are used to analyze corrections within an existing trend. They help identify potential support and resistance zones where the market might react.

The most well-known retracement levels are:

  • 23.6 %, 38.2 %, 50.0 %, 61.8 % (Golden ratio), 78.6 %

Traders often monitor these zones for new entries, stop-loss placements, or profit-taking.

Fibonacci extensions – determining price targets

While retracements measure corrections, Fibonacci extensions show how far a move might continue after a correction. They are used to define price targets.

Common extension levels are:

  • 61,8 %, 100,0 %, 127,2 %, 161,8 %, 200,0 %

These levels also serve as potential support and resistance zones.

Portrait Of Leonardo Fibonacci. Great Italian scientist. Mathematical science. History of medieval Europe.

Why do Fibonacci levels work in the market?

Fibonacci levels don’t work because they are “magical” – but because of market psychology:

  • Millions of traders and algorithms are watching the same levels.
  • Increased trading activity can be observed in these zones.
  • Reactions through recurring behavior of market participants
  • In markets with higher trading volumes and on higher timeframes, these levels are taken into account more frequently.

However, it is important to note that not every market and every phase is equally suitable for Fibonacci analysis.

Basic rules for using Fibonacci tools

To use Fibonacci effectively, some rules should be observed:

  • Fibonacci levels are zones, not exact lines
  • Swing heights and swing lows must be chosen carefully
  • More meaningful when combined with other indicators
  • Immer Trendrichtung und Marktstruktur berücksichtigen
  • Always consider trend direction and market structure
  • Avoid sideways markets if possible

Source:

The Impact of Fibonacci Retracement to Forecast the Support and Resistance of Select Indian Stocks and Indices“, February 2023, Arkaprava Chakrabarty and Ayan Majumdar

“What Are Fibonacci Retracement Levels, and What Do They Tell You?”, investopedia.com, Cedric Thompson, December 2025

“Fibonacci Trading“, finanzradar.de, Christian Böttger, Juni 2025

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