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The Fib Retracement tool is not included in your favorites by default, so you can add it by selecting the hollow star next to the tool icon and name. A favorites toolbar will then appear.
Fibonacci Retracements are an extremely popular tool in technical analysis. They are created by first drawing a trend line between two extreme points. The vertical distance between those two points is then divided up vertically with horizontal lines placed at key levels. Those levels are placed at the key Fibonacci Ratios of 23.6%, 38.2%, 61.8% and 100%.
The Fib Retracement tool includes the ability to set 24 different Fibonacci levels (including the 0% and the 100% levels that are defined by the two extremes of the trend line that is originally drawn). Values between 0 and 1 are internal retracement levels. Values greater than 1 are external retracement levels while values less than 0 are extensions. A checkbox is available for each defined level which allows that level to be turned on or off for display purposes.
The main use of these levels is that they act as levels of support and/or resistance when price is retracing back from an original advance or decline. These are key levels to take note of when price is correcting or experiencing a counter-trend bounce. The idea is that after an initial move (either a decline or an advance), price will often retrace back towards the direction it came from. The areas or levels defined by the retracement values can give the analyst a better idea about future price movements. Remember that as price moves, levels that were once considered to be resistance can switch to being support levels. The opposite is also true.
HOW TO USE IN TRADINGVIEW
- Navigate to https://www.tradingview.com/
- On the landing page, enter a symbol and click "Launch Chart"
- Drawing Tools are located along the left hand side of the chart. Select the Drawing Tool that you would like to add to your chart.
- You can access the Formatting Window by right clicking on the Drawing Tools in the chart itself and selecting "Format".
Can change the visibility and color of the trend line as well as its thickness and style.
Can toggle the visibility of additional levels. Can also change their color and line thickness.
Extends lines indefinitely.
Reverses the direction of the fib retracement.
Changes the positioning of the labels.
Can toggle the visibility of background colors as well as change their opacity.
Can toggle the visibility of text displaying level values.
Can toggle the visibility of text displaying price values.
Allows for the precise placement of the fib retracement's first point (Price 1) using a bar number and price.
Allows for the precise placement of the fib retracement's second point (Price 2) using a bar number and price.