Do Fibonacci levels help predict a bounce?

What are Fibonacci lines supposed to tell you?

Imagine a stock rises from $80 to $100, then starts falling. You want to know whether this is a temporary dip or the start of a bigger fall. Where might buyers step in and push the price back up?

Fibonacci lines mark possible stopping places along that drop. The tool measures the earlier rise and draws lines where the price would give back particular portions of it. Two familiar marks are 38.2% and 61.8%. In our $80-to-$100 example, those lines would sit at about $92 and $88.

You do not need to memorize those percentages to understand the idea. Traders watch the marked prices because they think a falling stock might recover there. That recovery is what we mean by a bounce. And giving back part of an earlier rise is what the word ‘retracement’ means.

The question is whether those particular marks help. A stock can turn upward near a line simply because the line happens to be there. Seeing a bounce beside a Fibonacci line does not, on its own, tell us the number predicted it.

We moved the marks on the ruler

Think of the Fibonacci tool as a ruler laid over a price chart. Its marks tell you where to watch for a bounce. We asked a simple question: what happens if we keep measuring the same earlier rise, but put the marks at different percentages?

We looked at price dips near the usual Fibonacci lines and compared them with dips near the moved lines. If the familiar Fibonacci percentages were giving us a useful clue, we would hope to see more recoveries near those lines.

We used monthly charts, so we were looking for moves over months. A tiny uptick did not count as a bounce. The price had to rise by twice its usual monthly price range within the following six months. Here, ‘range’ means the distance between a month's highest and lowest prices.

For example, imagine the stock usually covers about $5 from low to high in a month. If it dipped to $80, it would need to reach $90 within six months to count as a recovery. This is only an example to explain the rule. It does not assume someone could buy at the exact bottom.

We applied the same rule to both sets of lines. We also split the history into an earlier period and a period starting in 2016, to see whether the result changed over time. The chart below shows that later period.

What happened?

With the usual Fibonacci lines, about 55 out of every 100 cases had a recovery large enough to count. With the lines moved to different percentages, about 56 out of 100 did. Those are rounded versions of the figures below. The familiar Fibonacci numbers did not come out ahead.

So what should you take away from this?

Suppose you see a stock falling toward a Fibonacci line at $92. This study gives you no clear reason to say, ‘It is more likely to bounce because that is a Fibonacci number.’ In our comparison, moving the percentages around gave almost the same result.

We also looked at places where Fibonacci lines from different earlier price moves landed close together. You might expect two nearby lines to make the case stronger. They did not in this sample: about 46 out of 100 cases recovered, fewer than in either of the other groups.

That does not settle every argument about Fibonacci. We tested one way of drawing and judging these lines on monthly charts. Someone using daily charts or combining the lines with other information is asking a different question.

A line can still give you a specific price to watch. But deciding where to watch and knowing what happens next are two different jobs. This test did not show that the familiar percentages were better at the second job.

And a recovery rate is not a profit rate. A stock could fall further before recovering, and a trader could enter or exit at very different prices. These figures tell us about later price movement; they do not tell us how much a trading strategy would earn.

What this study cannot tell us

There is an important catch: this was a look back at old charts, and some of the lows used to draw the lines were identified with knowledge of what happened later. We also have the saved summary, rather than every original case. That makes this a reason to question the idea, not a final verdict on every way to use Fibonacci.

For readers who want to check the work

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Another question we tested

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Original research · September 10, 2026

Does a support line make a rebound more likely?

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