Fibonacci retracement

The formula

The 0.38, 0.50, 0.62 and 0.79 levels of a move, measured between its origin and its extreme.

How to read it

The most used retracement grid for placing an entry inside a pullback. In ICT, the 0.62-0.79 band is called the OTE zone.

In ICT and Smart Money Concepts, only the 0.62 to 0.79 band is kept, and it has a name: the OTE zone. The 0.38 and 0.50 levels are deliberately ignored because they leave too much of the move behind the entry. The tool draws directly on the Tradoshi chart, free plan included.

The classic mistake

Believing these levels have a mathematical property on markets. They have none. What gives them an effect, when there is one, is that many participants draw the same lines and place orders in the same place. It is a shared convention, not a law of nature.