Fibonacci Optimization Requires Reproducible Swing Anchors

A retracement level is a fraction of a defined price move. Its meaning depends on the two anchors, orientation and price scale. A line labeled 0.618 does not specify an executable entry or a demonstrated probability of reversal. The commonly included 50% level is a midpoint convention, not a Fibonacci ratio.

Specify how the strategy selects an ordered swing low and subsequent swing high, or the reverse for a decline. A rolling maximum and minimum can occur in the wrong chronological order for the intended swing. If pivot confirmation requires future bars, the pivot becomes available only after those bars close. A level drawn backward on the historical pivot must not be treated as information available at that earlier time. Also decide whether anchors freeze when an order is placed or can change while it waits.

For a concrete linear-price convention, let a confirmed upward swing run from L to H, with distance D = H − L. Define a long entry as H − rD, a stop as H − sD with s greater than r, and an extension target as L + tD with t greater than 1. These definitions use different origins for retracement and extension; they are stated explicitly so the price levels can be checked. Other drawing orientations or log-scale levels require their own formulas. Reject zero-length swings and combinations that put the stop or target on the wrong side of entry.