A Fibonacci retracement is a technical analysis tool based on the mathematical ratios of the Fibonacci sequence. It is used to identify potential support and resistance levels within an ongoing price movement.
The most commonly used Fibonacci levels are 23.6%, 38.2%, 50%, 61.8%, and 78.6%, with the 61.8% level—also known as the “golden ratio”—receiving particular attention.
Traders use Fibonacci retracements to estimate potential pullback zones after a strong price move and to look for possible entry signals at those levels. The tool is often combined with other technical methods such as candlestick patterns, trendlines, or indicators.
Fibonacci retracements do not provide guarantees, but they are widely used as a framework for structuring chart analysis.
