How to use Fibonacci retracement levels š
Fibonacci retracement levels, stemming from the Fibonacci sequence, are horizontal lines on the chart that indicate where price support and resistance are likely to occur.
š§® FibonacciĀ retracementĀ levels are 23.6%, 38.2%, 61.8%, and 78.6%.Ā Each level is associated with a percentage of how much of a previous move the price has retraced.
The indicator is useful because it can be drawn between any two significant price points, such as the high and the low, of a bearish or bullish trend. The indicator will then create the Fib levels between those two points.
āļø On most charting platforms, there is a Fibonacci retracement tool available in the drawing or technical analysis tools menu. Click on the identified high point, then drag the cursor to the low point of the price swing (or vice versa if it's an uptrend).
Fibonacci retracement is usually used to place entry or exit orders, determineĀ stop-lossĀ levels, or set price targets.
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