Fibonacci Retracement

Fibonacci retracement is a popular technical analysis tool that uses horizontal lines to indicate potential support and resistance levels based on key Fibonacci ratios. These levels help traders anticipate where an asset’s price might pause or reverse during a correction.

How It Works

Traders apply Fibonacci retracement levels—like 23.6%, 38.2%, 50%, 61.8%, and 78.6%—to recent price movements. These levels are drawn between a significant high and low, helping identify key price zones where buyers or sellers may step in.

Why It Matters in Crypto

In crypto markets known for high volatility, Fibonacci retracement is frequently used to plan entry and exit points during uptrends and downtrends. While not foolproof, it offers a structured approach to reading market sentiment and timing decisions.