bhala-srinivash Fibonacci Trading
Fibonacci levels identify high-probability zones where price tends to react — for entries on pullbacks and targets on extensions.
Prerequisites
No dependencies required. Just provide a swing high and swing low price — Claude calculates all Fib levels instantly. Enhanced with Groww MCP (auto-identifies swings from candles) or yfinance.
Data Needed
- Swing high and swing low: From
fetch_historical_candle_dataor user-provided prices - Current price:
get_quotes_and_depthfrom Groww, or user-provided - For precise calculation, you can compute in Python:
diff = swing_high - swing_low levels = { "23.6%": swing_high - diff * 0.236, "38.2%": swing_high - diff * 0.382, "50.0%": swing_high - diff * 0.500, "61.8%": swing_high - diff * 0.618, "78.6%": swing_high - diff * 0.786, }
Retracement Levels (Entry Zones)
After a significant move up, price often pulls back to these levels before continuing:
| Level | Character | Trading Implication |
|---|---|---|
| 23.6% | Shallow pullback | Strong trend — buyers eager, enter aggressively |
| 38.2% | Normal pullback | Healthy trend — standard entry zone |
| 50.0% | Deep pullback | Trend weakening but viable — enter with caution |
| 61.8% | Golden ratio | Last stand for the trend — high reward if it holds |
| 78.6% | Very deep | Trend likely failed — avoid or use tight stop |
For downtrend retracements (price bouncing up):
Same levels but inverted — measure from swing high down to swing low.
Extension Levels (Profit Targets)
After a retracement completes and price resumes the trend:
| Level | Use |
|---|---|
| 100% | Measured move — equal to the prior swing |
| 127.2% | Conservative target — good for partial profit |
| 161.8% | Standard target — most common for swing trades |
| 200.0% | Extended target — for strong trends |
| 261.8% | Full extension — rare, only in powerful moves |
Calculating Extensions
# For uptrend: price resumed from point C (retracement low)
ext_127 = C + (swing_high - swing_low) * 1.272
ext_161 = C + (swing_high - swing_low) * 1.618
ext_200 = C + (swing_high - swing_low) * 2.000
How to Draw Fibs
- Identify the swing: Find the most recent significant high and low (at least 5% move)
- Direction matters:
- Uptrend retracement: Anchor at swing low, drag to swing high
- Downtrend retracement: Anchor at swing high, drag to swing low
- Use the right swing: The most recent completed swing, not one still in progress
- Multiple swings: You can draw Fibs from different timeframes. When levels from different swings overlap, that's a confluence zone (very strong).
Confluence Zones
The most powerful Fibonacci levels are where they align with other technical factors. These zones have the highest probability of price reaction.
| Confluence Combination | Strength |
|---|---|
| Fib level alone | Moderate |
| Fib + horizontal S/R | Strong |
| Fib + moving average (SMA50/200) | Strong |
| Fib + trendline | Strong |
| Fib + S/R + MA | Very strong |
| Fib from multiple timeframes overlapping | Very strong |
Practical Examples
- Fib 38.2% from daily swing aligns with SMA50 → strong buy zone
- Fib 61.8% from weekly swing aligns with horizontal support from 3 months ago → high-probability entry
- Fib extension 161.8% aligns with a round number (Rs.2,000) → likely profit target
Fibonacci Trading Rules
- Don't use Fibs in isolation — they work best as confirmation alongside S/R, volume, and indicators
- Zone, not line — treat each level as a zone (±1-2%), not a precise price
- Wait for reaction — don't blindly buy at a Fib level. Wait for a reversal candle (hammer, engulfing, etc.)
- Strongest entries: Fib 38.2% to 61.8% zone in a healthy trend with volume confirmation
- If 78.6% breaks: The trend is likely over — exit or reverse