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Golden pocket

The zone between the 61.8 and 65 percent Fibonacci retracement levels, treated by some traders as the preferred area to enter a pullback.

The name comes from the 0.618 ratio's association with the golden ratio. The pocket is a narrow band rather than a single line, which is at least more honest than pretending a level is exact.

Its popularity in crypto and forex is largely self-referential: a lot of traders watch it, so a lot of orders sit there. That can make it function as a level for reasons that have nothing to do with mathematics.

Be clear about what this is. A retracement of roughly two thirds is a deep pullback, and deep pullbacks in genuine trends are less common than shallow ones. Waiting for the golden pocket often means missing the trend entirely, and in a real reversal price sails straight through it.

Related: fibonacci-retracement, fibonacci-extension, pullback, self-fulfilling-prophecy, confluence

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Fibonacci retracement levels across one swingA rally from a swing low to a swing high with horizontal lines drawn at fixed percentages of that move, and a later pullback that turns around on the 61.8 per cent line.FIBONACCI RETRACEMENT OF ONE SWING0% swing high23.6%38.2%50%61.8%78.6%100% swing lowpullback holds hereIllustrative swing. The levels are fixed fractions of the move from low to high.
Fibonacci retracement levels. Take one move from a swing low to a swing high and mark off fixed fractions of it — 23.6, 38.2, 50, 61.8 and 78.6 per cent. Traders watch those lines to see how much of the move a pullback gives back; here it stalls at 61.8 per cent.

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