Fibonacci Retracement

The Fibonacci Retracement indicator dynamically identifies key Fibonacci levels using ZigZag price movements to mark potential areas of price reversal or trend continuation. It replicates the functionality of the standard Fibonacci Retracement drawing tool but automates the process by calculating levels based on directional price swings and marking critical zones such as 0.236, 0.382, 0.5, 0.618, and 0.786.

Usage

The indicator is designed to plot Fibonacci levels within accumulation zones following significant price movements. Traders can use it to:

• Identify Support and Resistance: Use the generated lines to find areas where price is likely to find floor or ceiling.
• Determine Trend Direction: The tool can be set to detect "Upward" (bullish), "Downward" (bearish), or "Both" structures simultaneously.
• Visualize Structure:
  • Bullish Structure: High → Higher Low → Lower High.
  • Bearish Structure: Low → Lower High → Higher Low.
• Signal Indicators: A "📌" mark appears when Fibonacci levels are determined, and a "❌" mark appears if the price closes outside of the defined levels.

Details

The script utilizes a ZigZag algorithm to find major swing points. Once a significant swing movement is identified, the script waits for new swings to form within the range of the major movement without breaking the upper or lower boundaries. When these conditions are met, it places Fibonacci levels based on the major swing's start and end points. This automation helps eliminate subjectivity in drawing retracements.

Settings

ZigZag

• ZigZag Period: Adjusts the sensitivity of the pivot detection. Higher values result in fewer, larger swings.
• Show Zigzag: Toggles the visibility of the underlying zigzag lines.
• Zigzag Colors: Customizes the color for bullish and bearish zigzag lines.
• Show Previous Levels: When enabled, the indicator keeps past Fibonacci levels on the chart instead of only showing the most recent ones.

FIB Levels

• Fibonacci Direction: Filters the types of structures detected (Upward, Downward, or Both).
• Level 1-5: Allows users to input custom Fibonacci ratios (default: 0.236, 0.382, 0.5, 0.618, 0.786).
• Colors: Individual color settings for the border and each specific Fibonacci level.

Alert Section

• Custom Alert: Enables specific level-crossing notifications.
• Alert Source: Sets the price source used for alert calculations (e.g., Close).
• Alert Type: Choose between "cross-up", "cross-down", or "cross-any".
• Select Level: Chooses which of the 5 Fibonacci levels will trigger the custom alert.

FAQ

How do I use this to find entries?

Traders often look for price reactions (like candlesticks patterns) at the 0.5 or 0.618 levels during a retracement to enter in the direction of the primary swing.

Can I set alerts for specific levels?

Yes, by enabling "Custom Alert" in the settings, you can choose a specific Fibonacci level and a crossing condition (up, down, or any) to receive notifications.

How do I get access to Fibonacci Retracement?

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