Fibonacci Retracement
Also called: fib retracement, fibs
Horizontal levels (23.6%, 38.2%, 50%, 61.8%, 78.6%) drawn from a swing low to swing high to identify likely pullback zones.
Definition
After an impulse move, price typically retraces a portion of it before resuming. Fibonacci ratios — derived from the Fibonacci sequence — mark the levels traders watch for that retracement.
61.8% (the ‘golden ratio’) is the deepest retracement still considered a continuation; 78.6% borders on a full reversal. The 50% level isn’t a true Fib but is widely included for psychology.
Example
EUR/USD rallies from 1.0700 to 1.0900 (200-pip swing). The 61.8% retrace sits at 1.0776. Bulls watch that level for a bounce back into the uptrend.