Fibs from Prior Day

The Fibs from Prior Day display Fibonacci retracements and expansions calculated from the prior day high and low. Other than the below description, you may also review our Indicator Spotlight on the Fibonacci Retracement Levels (with video).

Indicator Description

With this indicator, one may measure the high and low points daily- or intraday data. However, please note the order of the retracements may be inverted, if daily data is used (i.e. if the highs and lows were made on the same day).

Fibonacci levels refer to areas of support or resistance levels calculated by using the Fibonacci sequence. A central concept here is what’s called the Golden Ratio, which refers to 1.618 and it’s inverse .618. The Italian mathematician, Leonardo Fibonacci (1170-1250), is credited for bringing the sequence to the West. Using the sequence, Fibonacci noticed that certain ratios could be calculated, corresponding to “divine ratios” found throughout nature and art.

Trading with Fibonacci Levels

Fibonacci levels are used to identify potential reversal and extension scenarios. Following a strong uptrend, the levels are used to predict the extent of a pullback. One may achieve the same during a downtrend, i.e. evaluating how far a counter-trend bounce may retrace. The Fibonacci levels from the current day are found by measuring the distance between the day high / low and dividing the vertical distance by the key Fibonacci ratios. The most commonly used retracement levels are 38.2% and 61.8%. Although not a Fibonacci number, the 50% retracement is usually included as a point of reference (half the range).

One may define the indicator levels individually. If you want to eliminate certain lines, simply set the value for these levels to zero. To add more retracement or expansion levels, you may add several instances of the fibonacci indicator to your chart.