Auto Fibonacci Retracement on Live Gold

What it shows

A dashed grey line joining the two swing points, then a horizontal line for each ticked level starting at the older point, labelled with the ratio and the price. A faint band is filled between the 0.5 and 0.618 levels.

How Pravex works it out

1. Find swing points with a zigzag. A bar is a swing high when no bar within half the swing size on either side has a higher high; swing lows work the same way on lows. The default swing size of 10 looks 5 bars each way.
2. Keep a swing only when the move from the previous one is large enough: at least the swing filter × ATR(10), expressed as a percentage of the closing price. With the default swing filter of 3 a swing must travel about three average candle ranges. A swing of the same kind as the last replaces it if it goes further, so highs and lows alternate.
3. The bars after the last confirmed swing also count. Their running extreme becomes a live point once it passes the size above, so the drawing follows the swing still forming.
4. Take the last two points: the older one (A) and the newer one (B). A level at ratio r sits at: B − (B − A) × r. Ratio 0 is the newer point and ratio 1 is the older one. Flipping the direction swaps the two, so 0 sits on the older point.
5. The lines start at A’s bar and, with the lines extended to the right, run to the last bar. Without that they stop at B.

Settings

Setting	Default	What changing it does
Swing filter (× ATR)	3	How far a move has to travel, in multiples of ATR(10) as a percent of the close, before it counts as a new swing. A higher number ignores small pullbacks and gives fewer, wider swings; 0 accepts every pivot.
Swing size (candles)	10	The swing window. A swing needs the extreme high or low of half this many candles on each side. A bigger number finds slower swings; a small one reacts to every short wiggle.
Flip the direction	off	Swaps which end is 0 and which is 1, so the ratios count from the older point toward the newer one.
Extend lines left and right	off, on	The first box runs the level lines to the left edge. The second (on) runs them to the latest candle and past it; with it off they stop at the newer swing point.
Price on each level	on	Adds the price of the level in brackets to its label.
Ratio on each level	on, Values	Adds the ratio to each label. The second box switches it between Values (0.618) and Percent (61.8%).
Label side	Left	Puts the labels at the left or right end of the level lines.
Fill transparency	85	How see-through the filled bands are, from 0 (solid) to 100 (no fill). At 85 the fill is faint.
Fill only the 0.5 to 0.618 band	on	Fills only the band between 0.5 and 0.618. Off fills every gap between neighbouring levels, in the colour of the level further from 0. After this box come 22 level rows, each with a tick box and a ratio you can type over (ticked by default: on: 0, 0.236, 0.382, 0.5, 0.618, 0.786, 1, 1.618, 2.618, 3.618, 4.236; off: 0.65, 1.272, 1.414, 1.65, 2.65, 3.65, 4.618, -0.236, -0.382, -0.618, -0.65). Only ticked rows are drawn, sorted by ratio; a ratio above 1 or below 0 lands beyond the swing.

How traders read it

Traders look at a pullback and ask how deep it might go. The levels quoted most often are 0.382, 0.5 and 0.618. With the default fill you can see the 0.5 to 0.618 pocket at a glance.

With invented numbers: gold rallies from 2,300 to 2,400. With 0 on the new high, the 0.5 level is at 2,400 − 100 × 0.5 = 2,350 and 0.618 is at 2,338.2. A pullback that stops in that band and turns up is the textbook case; one that goes straight through to the 1 level at 2,300 has taken back the whole move.

Use it as a map of where to look, then judge the candles that arrive at each line.

When it misleads

The swing is picked by the zigzag, and the newer point is a live running extreme, so when price makes a new high the whole ladder shifts and last hour’s levels disappear. It works best after a clear move; in a choppy range the last two swings are small and the levels crowd together. Different swing size or swing filter values give different swings from the same candles, so two people can have two different fibs on the same chart. A level that lines up with price is not a reason on its own.

Questions and answers

How does Auto Fib Retracement pick the swing?

A zigzag over the candles. A swing needs to be the extreme of half the swing size on each side and to move at least the swing filter × ATR(10) from the previous swing. The last two points are used.

Why did my Fibonacci levels jump after a new high?

The newer point is a running extreme, so it moves while the swing is forming and the whole ladder moves with it. Once later candles confirm a swing, it stays.

How do I make Auto Fib Retracement pick bigger swings?

Raise the swing filter, so small pullbacks no longer count, or raise the swing size so a swing has to be the extreme of more candles. Do the opposite to make it follow shorter moves.

What does flipping the direction do?

It swaps the ends: ratio 0 goes on the older point and 1 on the newer one. It is the drawing you would get by dragging a retracement tool the other way.

Related: Auto Fib Extension, Auto Pitchfork, Pivot Points High Low, every indicator.