Fibonacci Retracement
Fibonacci retracement uses specific percentages (23.6%, 38.2%, 50%, 61.8%) derived from the Fibonacci sequence to identify potential support and resistance levels during pullbacks.
Understanding the Concept
Markets don't move in straight lines. After Bitcoin pumps from $30k to $50k, it's going to pull back. But how far? This is where Fib levels help. The 38.2% and 61.8% retracements are where price tends to find support during healthy pullbacks. It sounds like magic math, but it works because everyone's watching the same levels. When BTC retraces to the 61.8% level and bounces, that's often your second chance to get in before the next leg up. Some traders think Fib is astrology for charts. Maybe. But when millions of dollars get placed at these levels, they become real whether you believe in the math or not.
Real-World Example
ETH rallies from $2,000 to $3,000. You plot Fib from the low to the high. The 61.8% retracement sits at $2,382. Price pulls back, hits $2,390, and bounces hard. That Fib level just made you money.
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