To determine Fibonacci retracement levels:
Identify the Recent Range: You need to identify the most recent significant peak and trough on the stock's chart.
Draw the Levels: Using those two points, you draw horizontal lines to indicate where potential support and resistance levels should be. These are based on key ratios identified by Fibonacci which are: 23.6%, 38.2%, 50%, 61.8%, and 100%.
Analysis: Once these levels are identified, they can be used to identify potential support levels where the stock might find "floor" prices and rebound, or potential resistance levels where the stock might start to face selling pressure.
Identify the Recent Range: You need to identify the most recent significant peak and trough on the stock's chart.
Draw the Levels: Using those two points, you draw horizontal lines to indicate where potential support and resistance levels should be. These are based on key ratios identified by Fibonacci which are: 23.6%, 38.2%, 50%, 61.8%, and 100%.
Analysis: Once these levels are identified, they can be used to identify potential support levels where the stock might find "floor" prices and rebound, or potential resistance levels where the stock might start to face selling pressure.