Fibonacci retracement is a technical analysis tool used by traders to identify potential levels of support and resistance in financial markets. This tool is based on the Fibonacci sequence, a mathematical concept where each number is the sum of the two preceding ones. Traders typically apply Fibonacci retracement levels to a price chart after a significant price movement, calculating key levels at which the price may reverse or consolidate. The main Fibonacci levels are 23.6%, 38.2%, 50%, 61.8%, and 100%. These levels are derived from the Fibonacci ratios and help traders observe potential price points where market participants may react, providing insight into market psychology and potential trading opportunities.
Technical Analysis