**Fibonacci Retracement:**
Fibonacci retracement is a popular technical analysis tool used in financial markets to identify potential support and resistance levels. This method is based on the Fibonacci sequence, which refers to a series of numbers where each number is the sum of the two preceding ones. The key values associated with Fibonacci retracement include 23.6%, 38.2%, 50%, 61.8%, and 100%.
When using Fibonacci retracement, traders identify two prominent points on the price chart (the highest and lowest points in the price movement), and then the distance between these two points is divided according to Fibonacci ratios. The specified levels are considered significant points, where prices are expected to retrace.
This tool provides traders with a signal about the possibility of a price retracement, helping them make buy or sell decisions. Despite its effectiveness, Fibonacci retracement should be used as part of a comprehensive strategy, including other technical analysis tools and risk management.
