Fibonacci Trend Lines start with a trend line (base line, 0% line). The two reference points (A and B) are positioned at pivots, for example at two highs (uptrend) or two lows (downtrend). Then, you need a third reference point (C) that defines the distance from the first trend line to the second line (100% line). The trend channel is divided into the so-called Fibonacci levels. The channel (border) lines are forming the 0% and 100% lines of a diagonal Fibonacci channel. The parallel 38,2%, 50% and 61,8% lines will be added automatically in between the border lines.
All Fibonacci drawing tools are based on the belief that the price development of securities is related to the numbers of the Fibonacci sequence, a mathematical series of numbers that was discovered in the twelfth century, and the so-called Fibonacci levels, which are derived from the ratios of consecutive Fibonacci numbers. Fibonacci numbers and Fibonacci ratios also appear in nature, for example in the arrangement of leaves in a sunflower, and in the golden ratio, which is used for example in architecture and paintings.
The connecting line between the first and third reference point is hidden per default, but you can choose to display it on the chart. You can also use a color gradient across all or selected Fibonacci levels. Additionally, you can choose which levels are displayed, customize the ratios used to calculate the levels, change the line style for the level lines, and show / hide the labels for each level: See Customizing Fibonacci Trend Line. Fibonacci Trend Lines are automatically drawn behind other chart objects (in the background of the chart). See also Moving and Copying Drawing Objects.
▪ Click on the Fibonacci Trend Line icon on the Drawing toolbar:
▪ Click on the chart at the first reference point of your line (A) and hold the mouse button down.
▪ Move the mouse pointer to the second reference point of your line (B) and release the mouse button.
▪ Move the mouse pointer away from the trend line and click on the third reference point (C) at the distance where you want to position the second line (100% line).
You can extend the Fibonacci levels to the right by using extension points: See Extending and Shortening Lines with Extension Points. To hide some of the levels, see Hiding and Showing Lines / Levels with Visibility Points.