Fibonacci Retracements

What the 38.2%, 50% and 61.8% retracement levels are, how to draw them, and an honest look at how SPY behaved around them in 2025 and 2026.

Where the numbers come from

The Fibonacci sequence (1, 1, 2, 3, 5, 8, 13, 21…) produces ratios such as 0.618 and 0.382. Traders apply these ratios to price swings. After a move from a swing low to a swing high, the retracement levels mark how far a pullback has gone: 23.6%, 38.2%, 50% and 61.8% of the move. (50% is not a Fibonacci ratio, but traders include it anyway.)

The idea is that pullbacks in a healthy trend often pause somewhere between the 38.2% and 61.8% levels before the trend resumes.

Retracement levels drawn from a swing low to a swing high.

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