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🔥 Candlestick Structures & Basics | Candlestick patterns | Trading charts | Candlesticks 🔥

📈 Understanding Fibonacci Retracement: A Trader’s Guide 📊

Fibonacci retracement is a go-to tool for traders to spot potential support and resistance levels in the market. Here’s a quick breakdown:

1️⃣ What is Fibonacci Retracement?

It’s a technical analysis tool that uses horizontal lines to mark key Fibonacci levels (23.6%, 38.2%, 50%, 61.8%, 100%) based on the Fibonacci sequence (0, 1, 1, 2, 3, 5, 8, 13, …). These levels highlight where price might pause or reverse.

2️⃣ How to Use It?

• Identify a price range (e.g., a stock moving from $50 to $60).

• Draw Fibonacci levels to find potential support/resistance zones.

• Example: For a $50-$60 range, levels are $54.50 (23.6%), $56.20 (38.2%), $55 (50%), $53.80 (61.8%), and $50 (100%). Use these to plan entries/exits.

3️⃣ How It Works?

Markets often retrace a portion of a move before continuing in the original direction, often near the “golden ratio” (1.618). For example, in an uptrend from $80 to $100, Fibonacci levels at $94.60, $90.80, $87.50, $84.20, and $80 can signal where price might find support.

🔑 Why It Matters: Fibonacci retracement helps traders anticipate price movements and make smarter decisions. Add it to your toolkit to level up your trading game! 🚀