Fibonacci on the CMT Exam

Fibonacci analysis is a key component of CMT Level 2 (15% weight under Fibonacci & Cycles). It also appears on Level 3 in integrated analysis scenarios.

For the full Level 2 curriculum, see the CMT exam guide.

Key Fibonacci Ratios

These ratios derive from the Fibonacci sequence where each number is the sum of the two preceding numbers:

RatioSourceSignificance
23.6%Derived from sequenceShallow retracement
38.2%n / (n+2)Moderate retracement
50.0%Not Fibonacci, but widely usedMidpoint reference
61.8%n / (n+1) = Golden RatioMost significant level
78.6%√0.618Deep retracement
100%Full retracementComplete giveback

Fibonacci Retracements

Retracements measure how much of a prior move has been retraced:

  • Draw from swing low to swing high (uptrend) or high to low (downtrend)
  • The 38.2% and 61.8% levels are considered most significant
  • Confluence with support/resistance strengthens levels

Fibonacci Extensions

Extensions project price targets beyond the original move:

  • 127.2%: Common first target
  • 161.8%: Major extension (Golden Ratio)
  • 261.8%: Extended targets for strong trends

Harmonic Patterns

Advanced patterns using specific Fibonacci ratios:

  • Gartley: XA → 61.8% retracement at B, ends at 78.6% at D
  • Butterfly: Extension pattern using 127% at D
  • Bat: Uses 88.6% retracement at D
  • Crab: Uses 161.8% extension at D

These are primarily tested on Level 2. Combine with indicators for confirmation.

Fibonacci & Elliott Wave

The Fibonacci sequence is deeply intertwined with Elliott Wave Theory. Wave proportions commonly follow Fibonacci ratios — Wave 3 often extends 161.8% of Wave 1.

Test your knowledge with practice questions and return to the main guide.

Fibonacci Retracement Levels — Common Support Zones

Key levels at 23.6%, 38.2%, 50%, 61.8%, and 78.6%