Fibonacci Retracement

A Fibonacci Retracement is a predictive technical indicator used to forecast potential price reversals or trend shifts in a stock or index. It employs horizontal lines drawn at key Fibonacci ratios (e.g., 23.6%, 38.2%, 50%, 61.8%) to highlight possible support and resistance levels. The logic assumes that after a new trend starts, prices often retrace to a prior level before resuming the trend. In action, traders use this tool to identify where reversals might occur, aiding decisions on entry or exit points. It’s a valuable method for mapping price corrections or continuations in trading.