Fibonacci Retracement: does it work?
Fibonacci retracements mark the 38.2%, 50% and 61.8% pullback levels of a prior swing, and the 61.8% level is the one most often taught as a place to buy an uptrend.
The rule we tested. Daily bars, as implemented (this differs from the popular teaching in the intro). Hold long for the next day when, at the close: the 50-day average of closes is higher than yesterday's (price itself may sit below it), the close lies in the 50% to 65% retracement zone measured down from the highest high of the last 50 days toward the lowest low (the "golden pocket"), and the candle closed above its open. The commonly taught stop below the 78.6% level was not part of the tested rule: the setting existed in the code but was never read. Swings come from a fixed 50-day window, not picked by eye.
- Fibonacci 61.8% retracement bounce in an uptrend (18 crypto pairs (BTCUSDT, BNBUSDT, XRPUSDT, ADAUSDT, …)), 2017-08-18 to 2025-03-14, costs 0.10%–0.17% per side: −66.6 pts/yr vs the benchmark across 945 completed trades, unadjusted p=1.000, BH-adjusted q=1.000: did not beat the benchmark.
These versions did not pass these tests. crypto pairs −66.6 pts/yr vs the benchmark (unadjusted p=1.000, BH-adjusted q=1.000). None cleared Tickfloor's Benjamini-Hochberg q<0.10 bar once weighed against every other rule tested alongside it. This describes the tested implementations, the costs and the benchmark stated here, not every version of the rule. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
This is one line in a wider check: Tickfloor's research desk has run 517 strategies, most of them against an equal-weight benchmark of the same assets rebalanced daily that pays no costs (the strategies pay theirs), and after correcting for how many were tested (Benjamini-Hochberg, 598 tests), 0 passed. That does not prove no strategy works, and it says nothing about untested versions of a rule. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.
Does the Fibonacci retracement strategy work?
These versions did not pass these tests. crypto pairs −66.6 pts/yr vs the benchmark (unadjusted p=1.000, BH-adjusted q=1.000). None cleared Tickfloor's Benjamini-Hochberg q<0.10 bar once weighed against every other rule tested alongside it. This describes the tested implementations, the costs and the benchmark stated here, not every version of the rule. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
What exact rule did Tickfloor test?
Daily bars, as implemented (this differs from the popular teaching in the intro). Hold long for the next day when, at the close: the 50-day average of closes is higher than yesterday's (price itself may sit below it), the close lies in the 50% to 65% retracement zone measured down from the highest high of the last 50 days toward the lowest low (the "golden pocket"), and the candle closed above its open. The commonly taught stop below the 78.6% level was not part of the tested rule: the setting existed in the code but was never read. Swings come from a fixed 50-day window, not picked by eye.
Is this financial advice?
No. This measures a publicly claimed strategy rule, not a recommendation. General information only, not personal advice.
See the full numbers on the Sentiment extremes family page, or the full method and every result.