Glossary term
Fibonacci Retracement
A charting framework that marks potential support or resistance levels at fixed ratios — 23.6%, 38.2%, 50%, 61.8% and 78.6% — of a prior price swing, derived from the Fibonacci sequence and widely used to frame where a pullback might pause.
Definition & the Ratios
A Fibonacci retracement is drawn between the start and end of a price swing — a rally or a decline — and divides that range into horizontal levels at 23.6%, 38.2%, 50%, 61.8% and 78.6% retraced. The core ratios (38.2% and 61.8% in particular) derive from the Fibonacci sequence, where each number is the sum of the two preceding it and the ratio between consecutive terms converges toward 0.618. Practitioners treat these levels as candidate zones where a retracing move might find support (in an uptrend) or resistance (in a downtrend), rather than as levels certain to hold.
Use in Elliott Wave Analysis
Fibonacci retracements play a specific structural role inside Elliott Wave analysis: a wave-2 retracement of wave-1 commonly falls near the 50% or 61.8% level, and a wave-4 retracement of wave-3 commonly falls near 38.2%, giving practitioners a ratio-based expectation for where a corrective wave might terminate before the next impulse leg begins.
How Closelook Uses It
Closelook's chart terminals include a Fibonacci drawing tool so a retracement grid can be plotted directly on any instrument's price history, alongside other structural overlays. As with all technical framing on the site, a retracement level is a reference zone to watch, not a prediction that price will reverse there.