how to calculate fibonacci retracement levels
you can calculate fibonacci retracement levels by completing the following steps for example if the price moves from 10 to 20 back to 15 10 could be point one 20 point two and 15 point three the fibonacci levels will then be projected out above 15 providing levels to the upside of where the price could go next if instead the price drops the indicator would need to be redrawn to accommodate the lower price at point three if the price rises from 10 to 20 and these two price levels are points one and two used on the indicator then the 61 8 level will be 6 18 0 618 x 10 above the price chosen for point three in this case point three is 15 so the 61 8 extension level is 21 18 15 6 18 the 100 level is 10 above point three for an extension level of 25 1 0 x 10 15 the ratios themselves are based on something called the golden mean or ratio 3 to learn about this ratio start a sequence of numbers with zero and one and then add the prior two numbers to end up with a number string like this the fibonacci extension levels are derived from this number string excluding the first few numbers as the sequence gets going if you divide one number by the prior number you get a ratio approaching 1 618 such as dividing 233 by 144 divide a number by two places to the left and the ratio approaches 2 618 divide a number by three to the left and the ratio is 4 236 the key fibonacci extension levels include 23 6 38 2 50 61 8 and 78 6 45 also common are 100 161 8 200 and 261 8 5 the 100 and 200 levels are not official fibonacci numbers but they are useful since they project a similar move or a multiple of that move to what just happened on the price chart 