Fibonacci Retracement

Horizontal levels based on Fibonacci ratios used to find potential reversals.

Fibonacci retracement draws levels at 23.6, 38.2, 50, and 61.8 percent of a prior move to identify where price might pause or reverse. Traders use these as potential support and resistance zones. Most of these ratios derive from the Fibonacci sequence, though the widely used 50 percent level does not.

After the rally, he watched the 61.8% Fibonacci retracement as a likely spot for the pullback to stall.