Overview
This indicator automatically displays Fibonacci retracement and extension levels on price charts using visible range data, offering traders a dynamic alternative to manual Fibonacci drawing tools.
Key Concepts
Fibonacci Sequence and the Golden Ratio
The Fibonacci sequence (0, 1, 1, 2, 3, 5, 8...)—where each term is the sum of the two preceding ones—has been used since ancient times. As the sequence approaches infinity, the ratio between consecutive terms converges to the Golden Ratio (1.618), a mathematical constant observed in nature and financial markets. Traders leverage these ratios to predict potential support/resistance levels.
Fibonacci Retracements and Extensions
- Retracements: Levels (23.6%, 38.2%, 50%, 61.8%, 78.6%) derived from the Golden Ratio’s inverse powers, indicating where price might stall or reverse during a pullback.
- Extensions: Levels (127.2%, 161.8%, 261.8%, 423.6%) projecting potential price targets beyond the initial trend.
👉 Master Fibonacci trading strategies to enhance your technical analysis.
Zig Zag Indicator
The Zig Zag filters minor price noise by connecting significant pivot highs/lows with straight lines. This script uses Zig Zag pivots (adjustable via "nth Last Pivot" setting) or visible chart extremes to calculate Fibonacci levels dynamically as you zoom/pan.
Visible Fibonacci Calculation Methods
- Visible Chart Range: Uses the highest/lowest points in the current view.
- Visible Zig Zag: Bases levels on historical Zig Zag pivots within the visible range.
Tip: Enable "Scale price chart only" in settings to avoid distorted chart scaling.
For Pine Script™ Developers
Technical Highlights
- Utilizes the VisibleChart library (by PineCoders), leveraging
chart.left_visible_bar_timeandchart.right_visible_bar_timeto detect visible bars. - Employs User-Defined Types (UDTs) for structured data handling, a feature introduced in Pine Script™ v5.
👉 Explore advanced Pine Script™ techniques for custom indicator development.
FAQs
How accurate are Fibonacci retracements?
While not foolproof, Fibonacci levels are widely watched, creating self-fulfilling prophecies in liquid markets. Combine them with volume or momentum indicators for higher confidence.
Can I customize the Fibonacci ratios?
Yes! The script allows modifying retracement/extension ratios in settings. Common additions include 50% (not a Fibonacci ratio but popular) or 127% (square root of 1.618).
Why use Zig Zag pivots instead of visible highs/lows?
Zig Zag pivots filter noise, providing cleaner levels during volatile or choppy price action.
Open-Source & Disclaimer
- Open-Source: Verified and modifiable by the community (House Rules apply).
- Disclaimer: Not financial advice. Use tools responsibly—see Terms of Use.
For trend analysis and chart patterns, explore our free scripting library.