Fibonacci Retracement

Named after famed 13th-century Italian mathematician Leonardo Fibonacci, Fibonacci ratios have become "classic" in technical analysis. It is almost "uncanny" how markets will move and then retrace back to the established ratios of 38, 50 and 62 percentile before resuming the initial move.

Traders who are "tuned in" to these ratios and how to use them, often find key points to re-enter trending markets. This tool will plot Fibonacci retracement points only on the last few bars, thereby not cluttering up the chart .

What is unique about this indicator (fromt the standard Fib tool that comes with TradeStation) is that you can assign a "today's high" (or low) function to it, and it will automatically adjust its pivot points throughout the trading session.

In the example below, the market retraced to slightly more than 50% before continuing down. The special tool was set up to automatically use the high of the day as the pivot high and the low of the day for the pivot low. While operating in this fully automatic mode, as the trading day developed, it changed the retracement lines as the market moved to its swing low.