Fibonacci retracement
Horizontal levels drawn across one move
What it is
A set of horizontal lines placed at fixed fractions of a single swing — commonly 38.2%, 50% and 61.8% of the distance from its low to its high. It is a measuring tool, not a calculation on price: you choose the two ends, and the levels follow from that choice.
What it may suggest
Where a pullback inside a move has often paused. The 50% and 61.8% lines are the two most watched, which is most of the reason price reacts at them at all.
Where it fails
The levels move when you move the anchors, so two traders on one chart can produce two different sets and both call theirs the right one. Anchored to a swing nobody else is looking at, it measures nothing. Treat a reaction at a fib line as confirmation of a level you already had, never as the reason for the level.
Also called fibonacci, fib levels, fib retracement, golden pocket, retracement levels.
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