Fibonacci Arcs

Fibonacci arcs are circles, or parts of circles, centred on a swing point. The radius is a Fibonacci ratio of the distance to the other swing point. Unlike a retracement line, an arc moves closer to the centre as time passes if you think in terms of the remaining distance to the curve, or, drawn the usual way, price meets a falling or rising curve rather than a fixed price. The idea is to combine a price fraction with the passage of time. A retracement that arrives late meets a different arc from a retracement that arrives immediately. That is the entire content of the tool. The market is not obliged to notice the curve.

Most platforms draw the arcs so they bulge back toward the start of the move, centred at the end. You read a pullback into an arc the way you would read a pullback into a horizontal ratio, with one extra degree of freedom: the touch depends on when it happens. That extra freedom makes arcs easy to claim in hindsight and hard to falsify. A horizontal 61.8 percent level is either touched or not. An arc can be "almost" respected by choosing the scale. Check the chart scale. Arcs are not invariant if the price and time axes are stretched, because a circle on the screen is not a circle in price-time units unless the plot is square in those units.

If you use arcs, use them as a secondary mark on a swing you would have retraced anyway, and prefer the places where an arc crosses a horizontal level you already trust. The crossing is a point in time as well as price. Do not take a trade because price touched an arc in the middle of nowhere. Do not let the curve talk you out of an obvious horizontal level.

Forgetting that the geometry is screen geometry. Zooming the time axis changes where the arc sits relative to the bars. Also drawing arcs on a log scale and a linear scale and expecting the same picture. State the scale.

Arcs add a shape that is sensitive to scaling and easy to fit. They do not encode volume, market structure, or a stop. Anything an arc suggests should still be visible as a horizontal price or a trendline a sceptic can check. If it is not, the curve is doing work the prices did not do.