Fibonacci Retracement Definition Part 4

Fibonacci Retracement Definition Is:

In finance, Fibonacci retracement is a method of technical analysis for determining support and resistance levels.

It is named after the Fibonacci sequence of numbers, whose ratios provide price levels to which markets tend to retrace a portion of a move, before a trend continues in the original direction.

A Fibonacci retracement forecast is created by taking two extreme points on a chart and dividing the vertical distance by important Fibonacci ratios.

0% is considered to be the start of the retracement, while 100% is a complete reversal to the original price before the move.

Horizontal lines are drawn in the chart for these price levels to provide support and resistance levels. Common levels are 23.6%, 38.2%, 50%, and 61.8%.

Yes, you can add or change any and/or all of these numbers to your trading style- they can be used to enter a trade, set stop loss and targets.

This retracement percentage lines are short term reversal areas to possible take new trades with the main trend of day, week or month.