What Is Fibonacci Retracement?
Fibonacci retracement is a tool that marks likely pullback levels within a move — commonly 38.2%, 50%, 61.8%. Traders use it to find where price might pause or reverse during a pullback before continuing the trend. It's especially popular with smart-money traders as part of the OTE entry.
How to draw it
Anchor the tool from the start of a move to its end (swing low to swing high in an uptrend). The retracement levels appear in between — the zones where price often pulls back to before resuming.
How traders use it
The 61.8% and 50–79% zone is where many look for entries in the trend direction. In smart-money terms, the Optimal Trade Entry (OTE) sits in the 62–79% retracement. Pair it with an order block or FVG for confluence.
A word of caution
Fib levels aren't magic — they work because many traders watch them, and because they often align with real structure. Use them as a map of likely reaction zones, confirmed by price action, not as guaranteed turning points.
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What are the main Fibonacci retracement levels?
The most-watched are 38.2%, 50%, and 61.8%. Smart-money traders also focus on the 62-79% zone for optimal trade entries.
Does Fibonacci retracement actually work?
It works largely because it aligns with structure and because so many traders act on the same levels. Use it as confluence with price action, not on its own.
Educational content only, not financial advice. Trading futures carries substantial risk of loss.