Forex hub·Chart analysis· 7 min read

Fibonacci retracement basics for forex

After a strong move, price usually pulls back before continuing. Fibonacci retracement gives you a map of where those pullbacks often pause.

By the TradeFather education team · Updated 27 Oct 2026 · Educational content, not financial advice

Key takeaways

Common retracement levels are 23.6%, 38.2%, 50%, 61.8% and 78.6%.
Draw from swing low to swing high in an uptrend, high to low in a downtrend.
Levels work best when they line up with support/resistance or a moving average.
Fib levels are zones to watch, not guaranteed turning points.

The levels

Fibonacci retracement levels

Level	Typical reading
23.6%	Shallow pullback in a very strong trend
38.2%	Healthy pullback, trend still strong
50%	Not a Fibonacci ratio, but widely watched
61.8%	The 'golden ratio' level, a popular deep pullback zone
78.6%	Very deep pullback; trend may be failing

How to draw

Drawing Fibonacci step by step

1
Find a clear swing
Pick an obvious impulse move, not a choppy range.
2
Uptrend
Click the swing low, drag to the swing high.
3
Downtrend
Click the swing high, drag to the swing low.
4
Watch the zones
Mark where Fib levels overlap with old support/resistance.

Worked example

EUR/USD example

EUR/USD rises from 1.0800 to 1.0900 — a 100-pip move. The 38.2% retracement is 1.0900 − 38.2 pips = 1.08618; the 50% level is 1.0850; the 61.8% level is 1.0900 − 61.8 pips = 1.08382.

If 1.0850 was also old resistance that turned into support, that overlap becomes the zone to watch for a bullish candle, with a stop below 61.8%.

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