Butterfly buy pattern

Fibonacci Price Targets

161 % Fibonacci Extension target and 61.80 % Fibonacci Retracement

Butterfly Buy Pattern on 5 min chart.

On the 4 hour chart of the EUR/USD we see that market price found support at the 61.80 % Fibonacci retracement and the daily S1 Pivot. From there, the Euro moved up to the 4-hour 10 Simple Moving Average (SMA) and the daily and weekly Pivot point resistance, where price started to slightly retrace back.

4-hour Fibonacci  Retracement

The 5 min Euro Chart below shows the development of a Butterfly buy chart pattern, which led to the sharp price reversal visible on the 4-hour chart.

The large black circle shows the butterfly pattern -three wave consolidation-after an impulsive move. The Euro passed the minor/ first butterfly buy target at 127 % Fibonacci Extension of the consolidation pattern and market price moved further to the final 161 % Fibonacci level of the Butterfly buy pattern. From there, the Euro reversed sharply to the upside and market reached the 161 % Fibonacci Extension of the whole swing from the high of the consolidation pattern/ Butterfly pattern to the market low.

In addition, the 161 % Fibonacci Extension level at the market bottom, which usually acts as the buying opportunity in the butterfly buy chart pattern, also coincided with the 100 % Fibonacci Extension level (of the recent swing down prior to the consolidation pattern moved to the high of the consolidation pattern).

Furthermore, the final 161 % Butterfly target coincides with the weekly Pivot point. The daily Pivot point might have acted as further resistance zone.

5 min Butterfly buy pattern

Fibonacci Retracements and Fibonacci Extensions

Important Fibonacci levels

61.80 Fib Retracement | 61.80 % and 100 % Fib Extension levels

Understanding Fibonacci Analysis

The charts below show the importance of the Fibonacci Analysis, which consists of Fibonacci Retracement levels as well as Fibonacci Extension levels.

Fibonacci Retracement levels highlight some important price levels during the retracement of a recent swing, which could lead to some price reaction. The 61.80 % Fibonacci retracement is the most important price retracement level (IMO).

The Fibonacci Extension level is the complete price range of a recent swing moved to the highest retracement level of this recent swing to target important price levels during the next impulsive leg, Hence the Fibonacci Extension levels can be drown when the retracement of the recent impulsive swing has terminated. The deepest price retracement level is the price point where the complete price range of the recent impulsive swing gets plotted on to show hidden Support/ Resistance levels. Important Fibonacci Extension levels are the 61.80 % Extension and the 100 % Extension. A minor Fibonacci Extension level is the 161 % level.

The Fibonacci Retracement gets employed first to find important price retracement levels when a recent swing is getting retraced whereby the Fibonacci Extension gets employed when the retracement terminates and a new impulsive leg starts to find important hidden support/ resistance.


On the 1 hour chart below we see that the 100 % Fibonacci Extension from the first leg down plotted on the beginning of the next leg down marks the price zone, where the EUR/USD found hidden Support after market breached the daily S2 Pivot.

1 hour Fibonacci Extension

On the 5 min chart below the 61.80 % Fibonacci Retracement provided resistance to the price retracement of the larger leg down (blue arrow). Further, the leg down consists of three minor swings/ waves down,  whereby momentum was fading away with every new swing. The retracement of the first leg down started at the daily support level (pink line) after market failed to break the daily S2 Pivot.

5 min Fibonacci Retracement