Fibonacci retracement and extension tools: drawing and reading levels
Fibonacci retracement and extension in SuperCharting: which levels are drawn, how to anchor them on a swing, and how traders read 0.382, 0.5 and 0.618.
Fibonacci retracement draws horizontal levels between a swing low and a swing high at ratios such as 0.382, 0.5 and 0.618, the zones where traders watch for a pullback to pause. Fibonacci extension projects levels such as 1.618 beyond the swing, for targets. In SuperCharting both are on the left toolbar under Gann and Fibonacci tools, and the retracement is also on the phone Draw menu.
The Fibonacci tools in SuperCharting
The Gann and Fibonacci tools flyout holds the whole family:
| Tool | Points | What it draws |
|---|---|---|
| Fib retracement | 2 | horizontal levels between two prices |
| Trend-based fib extension | 3 | levels projected from a third point |
| Fib channel | 3 | parallel lines at the ratios, following a sloped trend |
| Fib time zone | 2 | vertical lines at 0, 1, 2, 3, 5, 8, 13, 21, 34, 55 and 89 times the first gap |
| Fib speed resistance fan | 2 | fan lines through the ratios of the box |
| Trend-based fib time | 3 | vertical lines at time ratios from 0.382 to 3 |
| Fib circles, Fib speed resistance arcs | 2 | circles or arcs at the ratios |
| Fib spiral, Fib wedge | 2 or 3 | a golden spiral or wedge |
Most traders only need the first two. The others follow the same idea in time or in angles.
Fib retracement levels
The retracement tool draws these levels, each in its own colour with a light band between neighbours:
| Level | Common reading |
|---|---|
| 0 | the end of the swing |
| 0.236 | a shallow pullback in a strong trend |
| 0.382 | a normal pullback |
| 0.5 | the halfway point (not a Fibonacci ratio, but widely watched) |
| 0.618 | the "golden ratio" pullback, the most watched level |
| 0.786 | a deep pullback; beyond it the swing is often in question |
| 1 | the start of the swing |
| 1.618, 2.618, 3.618 | extensions beyond the start of the swing |
Each level is labelled with its ratio and price, for example 0.618 (24382.00). The levels are fixed in this version; you cannot add or remove ratios from the settings.
Which way to draw
The first click sets level 1 and the second click sets level 0.
- Pullback in an uptrend: click the swing low first, then the swing high. Level 0 sits on the high and the retracement levels fall below it toward the low.
- Bounce in a downtrend: click the swing high first, then the swing low. Level 0 sits on the low and the levels rise toward the high.
The rule is: start where the move began, finish where it ended.
Worked example
NSE:NIFTY rallies from 24,000 to 25,000 on a 1-hour chart. Click 24,000, then 25,000. With a 1,000-point range the tool shows:
- 0.236 at 24,764
- 0.382 at 24,618
- 0.5 at 24,500
- 0.618 at 24,382
- 0.786 at 24,214
If price pulls back and several candles close near 24,618 to 24,500 with smaller bodies, a trader studying the chart might call that zone support and watch it. If closes go below 24,214, many would say the swing has failed. These are readings to test, not instructions.
Trend-based fib extension
The extension uses three clicks: the start of the swing (A), its end (B) and the end of the pullback (C). Levels are then measured from C using the size of the A-to-B move, from 0 (at C) through 0.236, 0.382, 0.5, 0.618, 0.786, 1, 1.618, 2.618 and 3.618 up to 4.236, each labelled with its ratio and price.
With A at 24,000, B at 25,000 and C at 24,500, level 1 sits at 25,500 (the first move repeated from C) and 1.618 at 26,118. Traders often use level 1 and 1.618 as target zones and compare them with round numbers and earlier highs.
How to draw Fibonacci retracement in SuperCharting
- Open the chart and interval, for example XAUUSD on 4 hours.
- On the left toolbar, open Gann and Fibonacci tools and click Fib retracement. On a phone, tap Draw and choose Fib retracement.
- Turn on Magnet mode if you want the points to snap to the candle's high and low.
- Click the swing low, then the swing high (for an uptrend pullback).
- The levels appear with their prices. Click the drawing to select it, then use the floating toolbar to change its colour or Lock it.
- To get an alert at a level, select the drawing and click Add Alert, or right-click on the chart at the level's price and choose the Add alert row.
For an extension, pick Trend-based fib extension in step 2 and click three points instead of two.
Tips for using Fibonacci levels well
- Anchor on clear swings. Levels drawn from an arbitrary candle mean little. Use the highest high and the lowest low of the move you are studying, on the interval where it is obvious.
- Look for confluence. A 0.618 level that lines up with a previous high, a rising trend line from the drawing tools or a moving average carries more weight than one standing alone.
- Check higher intervals. In a multi-chart layout with drawing sync on, a retracement drawn on the 1-day chart appears on the 1-hour chart of the same symbol too.
- Practise on history. Use Bar Replay to stop the chart after a swing, draw the levels, then play forward to see how price reacted.
Past reactions at Fibonacci levels do not guarantee future reactions. Treat the levels as places to pay attention.
Frequently asked questions
Why are my levels upside down?
You clicked the points in the opposite order. Level 1 is always the first click; delete the drawing and click the start of the move first.
Can I change the Fibonacci levels?
Not in this version: the retracement always draws 0, 0.236, 0.382, 0.5, 0.618, 0.786, 1, 1.618, 2.618 and 3.618.
Do Fibonacci levels work on every chart type?
They are drawn in price, so they work on candles, bars, Heikin Ashi and the non-time types. On Heikin Ashi, anchor on real highs and lows by checking a candle chart.
Does the 0.5 level come from the Fibonacci sequence?
No. It is the midpoint of the move, included because so many traders watch it.