Use Fibonacci Retracement for Entry Points — Beginner's Guide

🎯 Use Fibonacci Retracement for Entry Points — Beginner's Guide

Trading is a game of timing — and knowing when to enter a trade can make all the difference. In 2025, as markets move faster than ever, traders are turning to Fibonacci retracement as one of the most reliable tools for identifying precise entry points.

This beginner’s guide will help you understand what Fibonacci retracement is, how it works, and how you can use it effectively in your trading journey. At AI Computer Classes – Indore, we teach these concepts using real stock data, interactive Power BI dashboards, and hands-on Python exercises — turning technical analysis into a practical skill you can apply instantly.

📘 What Is Fibonacci Retracement?

Fibonacci retracement is a technical analysis tool based on the idea that markets retrace a predictable portion of a move before continuing in the original direction.

It’s derived from the Fibonacci sequence, a natural pattern of numbers (0, 1, 1, 2, 3, 5, 8, 13…) found in everything from plant growth to financial markets.

The key Fibonacci retracement levels are:

• 23.6%
• 38.2%
• 50%
• 61.8%
• 78.6%

Traders use these levels to identify potential reversal zones — ideal points to enter a trade or take profit.

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📊 Why Fibonacci Retracement Matters in Trading

Fibonacci retracement helps traders:

• Spot potential reversal levels during corrections
• Find entry and exit points aligned with market trends
• Set accurate stop-loss and target levels
• Enhance confidence in trading decisions using data-backed analysis

Whether you trade stocks, forex, or crypto, Fibonacci retracement adds structure and mathematical logic to your strategy.

🧩 How to Draw Fibonacci Retracement on a Chart

To apply Fibonacci retracement effectively:

1. Identify a trend:
2. Choose a strong upward or downward move.
3. Select the retracement tool:
4. Most platforms like TradingView, Power BI, and Excel add-ins have built-in Fibonacci tools.
5. Connect the high and low points:

• For an uptrend, draw from the swing low to swing high.
• For a downtrend, draw from the swing high to swing low.

1. Observe retracement levels:
2. Watch where prices stall or reverse near key Fibonacci levels (especially 38.2%, 50%, and 61.8%).

🧠 Example: Using Fibonacci in Power BI

Let’s say you’re analyzing Infosys stock data in Power BI:

• You import daily prices using an Excel CSV.
• Add a Power BI line chart showing the stock’s recent rally.
• Overlay retracement levels using calculated measures (based on the swing high and low).
• The 61.8% level shows a pause — signaling a potential buy zone.

This data-driven approach makes your analysis visual, dynamic, and interactive.

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🔍 How to Use Fibonacci Retracement for Entry Points

Here’s how to combine retracement levels with smart entries:

1. Wait for price pullback:
2. When the market retraces to a Fibonacci level, look for candlestick confirmation (e.g., pin bar, engulfing).
3. Confirm with indicators:
4. Use RSI or moving averages to confirm oversold or overbought conditions.
5. Plan entry and stop-loss:

• Enter near 50% or 61.8% retracement levels.
• Place stop-loss just below the swing low (for buys).

1. Set target:
2. Target previous highs or Fibonacci extension levels (1.618, 2.618).

⚙️ Common Mistakes to Avoid

Even though Fibonacci tools are powerful, avoid these traps:

• ❌ Using them in sideways markets
• ❌ Ignoring trend confirmation
• ❌ Drawing from wrong swing points
• ❌ Over-relying on Fibonacci alone

Always combine Fibonacci retracement with volume, moving averages, and price action for accuracy.

🧮 Fibonacci and Python — Automation for Smart Traders

If you’re tech-savvy, you can calculate Fibonacci levels automatically using Python:

high = 2500
low = 2000

diff = high - low
levels = {
    "23.6%": high - diff * 0.236,
    "38.2%": high - diff * 0.382,
    "50%": high - diff * 0.5,
    "61.8%": high - diff * 0.618
}
print(levels)

This quick script can generate retracement levels for any stock automatically — perfect for AI-driven trading models.

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🧭 Conclusion

Fibonacci retracement isn’t just a fancy tool — it’s a trader’s compass that helps you time the market with confidence.

By learning how to identify Fibonacci levels, confirm entries, and visualize data through Excel or Power BI, you can transform your trading decisions into data-backed actions.

At AI Computer Classes – Indore, you’ll gain the technical and analytical skills to trade smarter — not harder. Start your journey today and master the blend of data analytics and trading intelligence.

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📱 Phone: +91 91113 33255

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