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Intermediate · Lesson 8 of 9

Fibonacci, pivot points and Elliott waves

6 minute read · By Krishna Avadhani, Vestora Academy · Updated 18 October 2026

Fibonacci retracement levels (23.6%, 38.2%, 50%, 61.8%) are widely drawn after a big move to guess where a pullback may stop. Pivot points use the prior day's high, low and close to set reference levels for the next day.

Elliott Wave theory claims markets move in five waves with the trend and three against. It is popular but subjective: two analysts often count the waves differently.

These tools can work partly because many traders watch the same levels (self-fulfilling). There is little rigorous evidence that the ratios themselves have special power. Treat them as possible zones of interest, never as certainties.

Key takeaways

  • Fibonacci levels: 38.2%, 50%, 61.8% are most watched.
  • Elliott Wave is subjective.
  • Popularity, not magic, gives these levels any power.

Check your understanding

1. Which is NOT a common Fibonacci retracement level?

  • 38.2%
  • 50%
  • 61.8%
  • 75.5%
Show the answer

75.5%. 75.5% is not a standard level.

2. The main criticism of Elliott Wave theory is...

  • It is too simple
  • Wave counts are subjective
  • It only works on bonds
  • It is new
Show the answer

Wave counts are subjective. Analysts frequently disagree on counts.

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