Fibonacci Levels is one of the most popular tools in the worlds of Technical Analysis. These levels are predictive in nature and helps to identify pullbacks or breakouts. People have been using it successfully since years especially in Forex market. Using Fibonacci retracements in your trading will not guarantee you overnight success. But if used in conjunction with other technical analysis indicators like RSI, MACD, moving averages, candlestick patterns, etc it can be very valuable. In this post, we have shared Fibonacci Levels Calculator Excel sheet. Please read through to understand how to use it.
Check out the other popular Excel sheets posted in this blog here.
What is Fibonacci Sequence?
The Fibonacci Sequence is a series of numbers where the each number in the sequence is the sum of previous two numbers. The first ten numbers in the Fibonacci Sequence are: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34. Fibonacci numbers also appear in many aspects of nature such as the arrangement of leaves on a stem and the branching of trees. Off lately, this sequence has gathered huge popularity in Financial markets too.
From the Fibonacci Sequence comes a series of ratios, and these ratios are of special significance to traders as they predict possible reversal or breakout. The most important Fibonacci ratio is 61.8% – it is sometimes referred to as the “golden ratio” or “golden mean” and is accepted as the most “reliable” retracement ratio. The Golden Ratio is arrived at by dividing any number in the sequence by the number that immediately follows it. No matter which number you choose, the answer will always be very close to the mean average of 0.618, or 61.8%. For example:
- 8 divided by 13 = 0.615 = 61.5%
- 13 divided by 21 = 0.619 = 61.9%
- 21 divided by 34 = 0.617 = 61.7%
The other two Fibonacci Ratios that forex traders use are 38.2% and 23.6%. These two ratios seem to have a lower level of success but are still included for analysis purposes.
The 38.2% ratio is derived by dividing any number in the sequence by the number found two places to the right. For example:
- 8 divided by 21 = 0.380 = 38.0%
- 144 divided by 377 = 0.381 = 38.1%
- 6765 divided by 17,716 = 0.381 = 38.1%
In a similar fashion, the 23.6% ratio consists of any number in the sequence divided by the number that is three places to the right:
- 5 divided by 21 = 0.238 = 23.8%
- 34 divided by 144 = 0.236 = 23.6%
- 6765 divided by 28,667 = 0.235 = 23.5%
In addition to these three ratios, most trading systems also show retracement levels at 50% and 100%.
How to use Fibonacci Levels?
Fibonacci Levels are broadly classified into two: Retracement levels and Extension levels. Retracement levels represent the percentage of Pullback or retrace before reversing into the original trend. While the Extension levels represent the price target. In general terms, the retracement levels give you an idea of where to put Stop Loss, while Extension levels help you identify the profit targets.
Here is the graphical representation of retracement:
After a stock makes a move to the upside (A), it can then retrace a part of that move (B), before moving on again in the desired direction (C). These retracements or pullbacks are what you as a swing trader want to watch for when initiating long or short positions.
Excel Sheet for Fibonacci Levels Calculator
|Worksheet Name||Fibonacci Levels Calculator|
|Inputs||Cell B5,B6,B20,B21|| |
High and Low values of the selected Stock for Uptrend and Downtrend respectively. It can be weekly High and Low for Swing Trading, or Hourly High and Low for Intraday Trading.
|Outputs||Cells E5:H16||Retracement and Extension levels for Uptrend|
|Cells E20:H31||Retracement and Extension levels for Downtrend|
Please download the Excel sheet from the below link. Let us know in the comments section if you have any queries.