Fibonacci retracement is a technical analysis tool that helps traders identify potential reversal levels based on key Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, and 78.6%).
Traders use Fibonacci levels to find high-probability support and resistance zones.
Traders draw Fibonacci retracement levels from a recent high to a recent low in an uptrend (or vice versa in a downtrend). Price often retraces to these levels before continuing in the original direction.
Test your knowledge of Fibonacci Retracement and its role in forex trading with the following questions:
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