# Fibonacci Retracement

### Precise Market Geometry <a href="#user-content--precise-market-geometry" id="user-content--precise-market-geometry"></a>

The **Fibonacci Retracement** tool is essential for identifying potential reversal zones during a trend. Instead of drawing lines manually every time the market moves, this indicator automatically identifies the most relevant recent swing and plots key retracement levels for you.

<figure><img src="/files/RCcxcH6nF8kDMUGBEAJB" alt=""><figcaption></figcaption></figure>

This feature is designed to help you spot "discounted" entry prices in an uptrend or "expensive" entry prices in a downtrend.

### Key Levels Explained <a href="#user-content--key-levels-explained" id="user-content--key-levels-explained"></a>

We automatically plot the most critical Fibonacci ratios used by institutional traders:

* **0 (0%)**: The start of the retracement (Swing High/Low).
* **0.382 (38.2%)**: **Shallow Retracement**.
  * *Usage*: Strong potential trend continuation. If price bounces here, the momentum is very high.
* **0.5 (50%)**: **Equilibrium**.
  * *Usage*: The midpoint of the swing. Often acts as a psychological support/resistance level.
* **0.618 (61.8%)**: **The Golden Pocket**.
  * *Usage*: The most famous reversal ratio. A highly probable area for price to turn.
* **0.705 (70.5%)**: **OTE (Optimal Trade Entry)**.
  * *Usage*: A precision level often used by algorithmic traders for deep retracement entries.
* **0.79 (79%)**: **Deep Retracement**.
  * *Usage*: The "last line of defense" before a full reversal. Entries here offer excellent Risk/Reward ratios.
* **1 (100%)**: The invalidation point (Swing High/Low).

### Zones of Interest <a href="#user-content--zones-of-interest" id="user-content--zones-of-interest"></a>

To simplify your chart, we verify two distinct zones based on depth:

#### 1. Shallow Pullback Zone <a href="#user-content-1-shallow-pullback-zone-greenbuy-zone" id="user-content-1-shallow-pullback-zone-greenbuy-zone"></a>

<figure><img src="/files/Jzq2I76QI0SrgFTxk1ZA" alt=""><figcaption></figcaption></figure>

* **Range**: **0.382 – 0.50**
* **Meaning**: This zone represents a minor correction in a strong trend. Aggressive traders look for entries here to catch continuation moves quickly.

#### 2. Deep Retracement Zone <a href="#user-content-2-deep-retracement-zone-redsell-zone" id="user-content-2-deep-retracement-zone-redsell-zone"></a>

<figure><img src="/files/wFqDvpGHMCax1aKCyD5q" alt=""><figcaption></figcaption></figure>

* **Range**: **0.705 – 0.79**
* **Meaning**: This is the "sweet spot" for high R:R trades. Price has pulled back significantly, offering a cheap entry before the trend (ideally) resumes. This area is often referred to as the "Kill Zone" or "OTE".


---

# Agent Instructions: Querying This Documentation

If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://docs.candelacharts.com/toolkits/interbank-price-action-tm/fibonacci-retracement.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.