The 61.8% Fibonacci retracement is the level every chart course tells you to watch after a rally: price pulls back, holds the “golden ratio”, and the trend carries on. Forex traders use it more than anyone, so I tested it on EUR/USD, the most traded currency pair.
The rule here is the one I would draw by hand, made mechanical so a program can follow it: the stop goes under the rally’s low and the target at its high, both set by the chart before the trade starts. I ran it on EUR/USD since 2004: 30 closed trades.
The rules
- Buy when EUR/USD, after closing at or below the 61.8% retracement of its last rally, closes back above it.
- The last rally: the highest close of the previous 60 trading days, and the lowest close before it inside the same 60 days. It counts only if it rose at least 3% and no close since the high has gone below its low.
- Sell when a close goes above the rally’s high (the target) or below its low (the stop). Both are fixed on the day of the buy signal.
- Daily closes. Long only; in cash between trades.
Market: Euro in US dollars (EURUSD=X).
The result
| Fibonacci 61.8% bounce | Buy-and-hold | |
|---|---|---|
| Annual return | 1.52% | −0.41% |
| Total return | 41% | −9% |
| Max drawdown | −10.2% | −40.0% |
| Worst fall, from – to | Jun 2011 – May 2012 | Apr 2008 – Sep 2022 |
| Time in the market | 17% | 100% |
| Trades | Value |
|---|---|
| Closed trades | 30 |
| Winners | 17 (56.7%) |
| Average winner | +3.58% |
| Average loser | −1.93% |
| Win/loss ratio | 1.85 |
| Profit factor | 2.42 |
| Best / worst trade | +7.6% / −4.3% |
| Average holding time | 33 sessions |
My read
This one did what a setup should do. 57% of the trades won, and the average winner (3.6%) was bigger than the average loser (−1.9%). That is built into the rule: from the 61.8% level the target is further away than the stop. The best trade, bought in Dec 2010, made 7.6%; the worst, bought in May 2011, lost 4.3%.
It made 1.5% a year. Holding the euro against the dollar over the same days lost 0.4% a year, so the rule beat holding, and its worst fall was 10% against 40%. It was in the market only 17% of the time.
Before anyone gets excited: 1.5% a year is small, it is before costs and with no interest on the cash, and 30 trades in 23 years is a thin sample. The setup is also rare. Between Nov 2018 and Feb 2021 it did not trade at all.
My read: the 61.8% level is not magic, but a pullback inside a clear rally, with the stop under the low and the target at the high, is a sound trade shape. The level gives you a place to act; the stop and the target are what made the numbers work. As one tool in a read of the chart it is useful. As a whole trading plan it is far too quiet.
Every trade
30 closed trades, newest first
| Bought | Price | Sold | Price | Result |
|---|---|---|---|---|
| 2026-06-16 | 1.1594 | 2026-06-22 | 1.1463 | −1.1% |
| 2025-10-14 | 1.1567 | 2026-01-28 | 1.2018 | +3.9% |
| 2024-02-01 | 1.0804 | 2024-04-16 | 1.0626 | −1.6% |
| 2023-09-01 | 1.0844 | 2023-09-11 | 1.0718 | −1.2% |
| 2023-03-15 | 1.0728 | 2023-04-17 | 1.0987 | +2.4% |
| 2021-06-24 | 1.1933 | 2021-08-12 | 1.1742 | −1.6% |
| 2021-02-09 | 1.2054 | 2021-03-25 | 1.1813 | −2.0% |
| 2018-10-08 | 1.1523 | 2018-11-02 | 1.1403 | −1.0% |
| 2017-04-14 | 1.0616 | 2017-04-25 | 1.0865 | +2.3% |
| 2017-02-24 | 1.0584 | 2017-03-23 | 1.0790 | +1.9% |
| 2016-05-30 | 1.1110 | 2016-10-24 | 1.0883 | −2.0% |
| 2016-03-08 | 1.1016 | 2016-04-01 | 1.1380 | +3.3% |
| 2015-07-16 | 1.0944 | 2015-08-26 | 1.1551 | +5.6% |
| 2013-11-13 | 1.3440 | 2014-01-01 | 1.3745 | +2.3% |
| 2013-07-03 | 1.2979 | 2013-07-09 | 1.2871 | −0.8% |
| 2013-05-28 | 1.2934 | 2013-06-10 | 1.3224 | +2.2% |
| 2012-11-19 | 1.2759 | 2012-12-18 | 1.3165 | +3.2% |
| 2012-04-13 | 1.3189 | 2012-05-16 | 1.2736 | −3.4% |
| 2011-05-18 | 1.4269 | 2011-09-13 | 1.3660 | −4.3% |
| 2010-12-07 | 1.3287 | 2011-04-08 | 1.4302 | +7.6% |
| 2009-04-23 | 1.3141 | 2009-05-21 | 1.3906 | +5.8% |
| 2008-06-06 | 1.5785 | 2008-07-09 | 1.5736 | −0.3% |
| 2008-01-11 | 1.4790 | 2008-03-14 | 1.5618 | +5.6% |
| 2007-12-24 | 1.4397 | 2008-01-09 | 1.4664 | +1.9% |
| 2007-08-23 | 1.3557 | 2007-09-12 | 1.3908 | +2.6% |
| 2007-01-24 | 1.2963 | 2007-03-22 | 1.3334 | +2.9% |
| 2006-02-20 | 1.1934 | 2006-04-19 | 1.2378 | +3.7% |
| 2005-09-23 | 1.2041 | 2005-11-07 | 1.1793 | −2.1% |
| 2005-04-20 | 1.3087 | 2005-05-13 | 1.2616 | −3.6% |
| 2004-08-05 | 1.2052 | 2004-10-18 | 1.2489 | +3.6% |
How it was tested
- Signals are read on the daily close; each trade happens at the next day’s close. No look-ahead.
- Long only, fully in or fully out. No commissions, slippage, interest or dividends.
- The test starts on the first day every indicator has a value (Feb 23, 2004); buy-and-hold covers the same days.
- Prices: Yahoo Finance daily data (EURUSD=X), snapshot
eurusd-2026-09-23.csv. Checked by a second, independent program before publishing.
Not financial advice. This is educational content, shared for information and entertainment only, and it is not a recommendation to buy or sell any asset. Backtests and past results do not guarantee future results, and the numbers or charts here may contain mistakes. Trading carries risk, including losing all the money you put in. Do your own research before you make any decision.