Logarithmic Fibonacci Retrace

The Logarithmic Fibonacci Retrace indicator provides a specialized tool for calculating retracement levels based on logarithmic mathematics rather than standard linear progression. This approach is particularly effective when analyzing significant price movements over long timeframes where linear calculations may produce inaccurate results.

Usage

To use the tool, users must manually input two price points representing the start and end of a trend move (Wave 0 and Wave 1). Once the price points are entered, the "Show lines" and "Show labels" settings can be enabled to visualize the retracement levels on the chart.

• Wave 0 & 1: Define the price range for the retracement calculation.
• Visualizing Levels: Toggle the visibility of the Fibonacci lines and their respective ratio labels.
• Adjusting Layout: Use the "Label offset" setting to shift labels horizontally, ensuring they do not overlap with recent price action.

Note: As this is an indicator script, the input values for Wave 0 and 1 must be updated manually when switching between different symbols or timeframes.

Details

The core logic of this script uses logarithmic growth/decay formulas to determine Fibonacci ratios. In standard linear Fibonacci tools, the distance between 0 and 0.5 is the same as 0.5 and 1.0 in absolute price terms. In a logarithmic model, these levels are calculated as a percentage of the total move, which better reflects how markets trend during periods of high volatility or multi-year price discovery. This method is often favored by Elliott Wave practitioners to identify high-probability reversal zones.

Settings

• Wave 0: The starting price point of the move.
• Wave 1: The ending price point of the move.
• Show lines: Enables the display of horizontal circles at the calculated Fibonacci levels.
• Show labels: Enables text labels indicating the Fibonacci ratio (0.000, 0.236, 0.382, 0.500, 0.618, 0.786, 0.886, 1.000).
• Label offset: Shifts the lines and labels to the right of the current bar by a specified number of bars.

FAQ

Why use logarithmic instead of linear Fibonacci?

Logarithmic retracements account for the percentage change in price, making them more accurate for long-term charts or assets with massive price swings where linear math fails to reflect market psychology correctly.

Why are lines hidden by default?

Lines are hidden initially to prevent the chart from warping its vertical scale before you have entered the specific Wave 0 and Wave 1 values for your chosen asset.

How can I access this tool?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.