Archive · 5 Sep 2026
How Fibonacci Retracements Identify Market Support and Resistance
Fibonacci numbers are a pattern made by adding the last two numbers together.
Some ratios from this pattern are used to study price charts.
Traders use Fibonacci retracements to look for places where a falling price might stop.
They also use them to find places where a rising price might face resistance.
The main ratios discussed are 38.2% and 61.8%, along with 50%.
To calculate them, traders first identify the highest and lowest prices in a move.
Charting software can calculate the levels automatically.
The article gives an example involving the Nifty 50 index.
It says the index recovered after moving near an important retracement area.
Fibonacci numbers form a sequence by adding the previous two numbers, beginning with 0 and 1.
The ratios 0.382, 0.618 and 0.5 are commonly used to calculate potential market retracement levels.
For an uptrend that reverses lower, retracement levels are calculated as H-(0.382×D) and H-(0.618×D).
For a downtrend that reverses higher, the formulas are L+(0.382×D) and L+(0.618×D).
The Nifty 50’s rise from 2,253 to 12,431 produced a 50% retracement level of 7,342, while the index later reached 7,511 before recovering.
- Who
- Technical analysts and market participants using Fibonacci retracement tools.
- What
- An explanation of Fibonacci numbers, ratios and formulas used to identify potential support, resistance and reversal levels.
- When
- Published September 5, 2026.
- Where
- In financial markets, including the Nifty 50 and Indian rupee examples.
- Why
- To help analyze price charts and forecast possible support, resistance and reversal points.
- Fibonacci sequence
- A number sequence beginning 0, 1, 1, 2, 3, 5, 8 and continuing by adding the previous two numbers.
- Main ratios
- The article highlights 0.382 and 0.618, with 0.5 also treated as important.
- Uptrend formula
- After an uptrend reverses lower, levels are H-(0.382×D) and H-(0.618×D).
- Downtrend formula
- After a downtrend reverses higher, levels are L+(0.382×D) and L+(0.618×D).
- Price range
- D represents the move’s high minus its low: D=H-L.
- Nifty 50 example
- The index rallied from 2,253 in October 2008 to 12,431 in January 2020.
- Example retracement
- The 50% retracement was 7,342; the Nifty 50 later touched 7,511 before recovering.