Trading the 0.786 and 0.886 Fibonacci retracement levels isn’t a strategy with an exceptionally high win rate.
Trading the 0.786 and 0.886 Fibonacci retracement levels isn’t a strategy with an exceptionally high win rate. But there’s a clear reason to consider the risk-to-reward ratio at these levels. It’s not because price is guaranteed to bounce. It’s because these levels can make it easier to compare a clear exit point if you’re wrong with a potential target if you’re right. Let’s start with the numbers. For an upward price move, the 0.786 and 0.886 levels represent retracements of 78.6% and 88.6% of that move. In other words, price has dropped back close to the previous low. If that previous low is the level that invalidates your trade setup, entering here can put your entry closer to your stop than chasing price near the high would. But being close to the low means two things: it could be an opportunity to buy at a lower price, or it could mean the existing bullish structure is on the verge of breaking down. A deeper retracement does not automatically mean a higher probability of a b...