Fibonacci Levels System Development
Fibonacci levels are one of the most widely used technical analysis tools: 23.6%, 38.2%, 50%, 61.8%, 78.6% of price movement. Their popularity itself is the reason for their effectiveness: if enough traders place orders at the 61.8% level, that level becomes a real support/resistance zone.
Types of Fibonacci Levels
Fibonacci Retracement — correction from previous movement. Built from swing low to swing high (or vice versa). Key levels: 38.2%, 50%, 61.8%. Level 61.8% (golden ratio) — most significant.
Fibonacci Extension — target beyond original movement. Levels 127.2%, 161.8%, 261.8%. Used for profit taking calculation.
Fibonacci Time Zones — vertical lines on time axis through Fibonacci numbers of candles after reference point. Less popular, but used for identifying time cycles.
Fibonacci Fan — lines from movement start point at Fibonacci angles. Dynamic support/resistance levels.
Automatic Construction
Key complexity — automatic selection of "correct" swing high and swing low for retracement construction.
Anchor point selection algorithm:
- Find all significant pivot highs and lows for the period (sliding window)
- Determine current trend (EMA or linear regression)
- For uptrend take last significant swing low and current swing high
- For downtrend — last swing high and current swing low
- Check that movement is significant enough (minimum 3–5% from price)
Finding multiple levels simultaneously — system builds Fibonacci retracement for several recent significant movements. Zones where levels of different Fibonacci grids coincide — "clusters" with increased significance.
Automatic Price Behavior Analysis
Bounce from level: price touched level ±0.5% and reversed. Generates potential signal.
Level break: candle closed beyond level with volume above average. Next Fibonacci level becomes new target.
Confluence zones: if Fibonacci level coincides with pivot point, Moving Average or Volume Profile POC — this is a zone of increased attention.
Visualization
Levels are displayed as horizontal lines with color coding: 38.2% — yellow, 50% — orange, 61.8% — red (for retracement). Extension levels — shades of green. Zones are built as semi-transparent rectangles between adjacent levels.
Auto-update: when new significant swing point forms, grid is recalculated and updated on chart.
Stack: Python for level calculation, PostgreSQL for storing grids, WebSocket for real-time updates, React + TradingView Lightweight Charts or canvas-based rendering for visualization. System scans specified list of instruments and updates Fibonacci grids on each candle close.