Fibonacci Retracement
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Fibonacci retracement is an indicator that can pinpoint the degree to which a market will move against its current trend.
A retracement is when the market experiences a temporary dip or rise– it is also known as a pullback.
Traders who think the market is about to make a move often use Fibonacci retracement to confirm this. This is because it helps to identify possible levels of support and resistance, which could indicate an upward or downward trend.
Because traders can identify levels of support and resistance with this indicator, it can help them decide where to apply stops and limits, or when to open and close their positions.