Fibonacci retracement uses ratios such as 38.2%, 50%, and 61.8% to mark levels where a pullback within a trend might pause or reverse. Traders draw them between a swing high and low and watch for reactions, often combining them with support and resistance.
Forex Term
Fibonacci Retracement
Levels used to estimate how far a pullback may go.
Example
After a rally, price often pulls back to the 61.8% Fibonacci level before resuming higher.
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