A technical analysis tool used to identify potential support and resistance levels by measuring key ratios derived from the Fibonacci sequence.
Fibonacci retracement levels are horizontal lines on a price chart that indicate potential support or resistance areas. These levels are calculated by taking two extreme points on a chart (usually a major high and a major low) and dividing the vertical difference between them by key Fibonacci ratios (e.g., 23.6%, 38.2%, 50%, 61.8%, and 78.6%). These levels are often used by traders to anticipate price reversals or continuations.