Fibonacci retracement is a technical analysis tool used by traders to identify potential levels of support and resistance in a financial asset’s price movement. Based on the Fibonacci sequence, key retracement levels—such as 23.6%, 38.2%, 50%, 61.8%, and 78.6%—are drawn between a significant high and low on a price chart. Traders use these levels to anticipate possible reversal points or areas where the price may consolidate before continuing its trend. By applying Fibonacci retracement, traders can make more informed decisions about entry, exit, and stop-loss placements, enhancing their strategy for both short-term and long-term trading.