Fibonacci Retracement
A term used in technical analysis that refers to the likelihood that a financial asset's price will retrace a large portion of an original move and find support or resistance at the key Fibonacci levels before it continues in the original direction. These levels are created by drawing a trendline between two extreme points and then dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%.
Investopedia Commentary
Fibonacci retracement is a very popular tool used by many technical traders to help identify strategic places for transactions to be placed, target prices or stop losses. The notion of retracement is used in many indicators such as Tirone levels, Gartley patterns, Elliott Wave theory and more.
Related Links
Fibonacci And The Golden Ratio
Support and Resistance Zones - Part 1
Support and Resistance Zones - Part 2
Introduction To Technical Analysis
See also: Elliott Wave Theory, Fibonacci Arc, Fibonacci Fan, Fibonacci Numbers/Lines, Fifty Percent Principle, Gartley Pattern, Resistance, Retracement, Stop-Loss Order, Support
Also spelled: fibbonacci, fibonnaci, fibonnacci