Fibonacci Retracement
Technical tool using Fibonacci levels to identify support/resistance zones.
Fibonacci retracement is a technical tool relying on the Fibonacci sequence (0, 1, 1, 2, 3, 5, 8...) and derived golden ratios to find potential support and resistance zones.
Key levels:
•23.6% — shallow correction, strong trend
•38.2% — moderate correction
•50.0% — psychological level (not Fibonacci, but popular)
•61.8% — "golden ratio", most important level
•78.6% — deep correction, weakening trend
How to use: 1. Identify swing low and swing high (or reverse for downtrend) 2. Draw Fibonacci between those two extremes 3. Horizontal levels are potential correction and reversal zones
Target extensions: 1.618, 2.618 — where price may go after breakout
Fibo works because so many traders watch it that it becomes self-fulfilling. Use with volume and candlestick confirmations.