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7Grade 7: Price Action Lab
Technical Analysis + Price Action · Fibonacci Retracement

The common retracement levels

Memorize the five Fibonacci retracement levels and what each one tends to mean.

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Technical Analysis + Price Action

Fibonacci Retracement

Lesson 50 of 9652%
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Lesson 50 of 96Technical Analysis + Price ActionFibonacci Retracement

Today's tiny win: make one idea click.

Memorize the five Fibonacci retracement levels and what each one tends to mean.

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Five levels, each with a job

Picture a stock that rips up from $100 to $120. Then it cools off. How far back does it usually fall before buyers step in? Not random distances. Traders worldwide watch five specific pullback depths: 23.6%, 38.2%, 50%, 61.8%, and 78.6%. Each one tells you something different about the move.

Wick points at a chalkboard listing the pullback levels, 23.6% and 38.2% as shallow, 50% as the middle and 61.8% as the line in the sand, so each level has its own meaning.Five pullback levels23.6% and 38.2%: shallow50%: the middle61.8%: line in the sand
Wick saysShallow pullbacks show a strong trend, and 61.8% is the line in the sand.

23.6% is the shallowest. If price barely retraces this far before continuing, the trend is roaring. Buyers are aggressive. They're not waiting for a deep discount. 38.2% is the next stop and a very common one. A pullback that holds the 38.2% line usually signals the trend is still healthy. Traders call these shallow retracements 'continuation pullbacks' because the move resumes quickly.

50% is the psychological middle. It's not a true Fibonacci ratio, but most charting platforms include it because half a move feels like a fair price. Buyers who missed the move often wait here. 61.8% — the golden ratio — is the deepest level that still counts as a healthy pullback. Price retracing this far is testing the trend. If it holds, the trend usually continues. If it breaks, the trend is in trouble.

78.6% is the deep end. Price has given back almost the entire move. From here, two things usually happen: either an aggressive reversal back in the original direction (smart money loves this level) or a full breakdown of the trend. There's no in between.

Wick works a calculator showing price going from $120 back to $112, which is $8 of a $20 move, about the 38.2% level, teaching how to measure a pullback.$120 → $112 = $8 of a$20 move≈ 38.2%
Wick saysA $20 move up that gives back $8 has pulled back about 38.2%.
Wick shows a green card saying treat each level as a small area and a coral card saying expect price to hit the exact pixel, teaching that price can react a few pips around a level.Do thisTreat each levelas a small areaNot thisExpect price tohit the exact pixel
Wick saysFib levels are areas, so trade the zone, not the exact pixel.

Recap: 23.6% and 38.2% are shallow — trend continues. 50% is the middle. 61.8% is the line in the sand. 78.6% is the deep test. Tomorrow we draw them.

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0 / 3 answered

1. Price moves from $100 to $120, then pulls back to $112. What Fibonacci level is that?

2. Which retracement level is technically NOT a Fibonacci ratio?

3. A pullback that holds the 38.2% level usually means what?

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