Fibonacciretracementtyökalujen

Fibonacci retracement is a technical analysis tool used to identify potential reversal levels in the price of an asset after a directional move. It is based on Fibonacci ratios derived from the Fibonacci sequence, with common retracement levels including 23.6%, 38.2%, 50%, 61.8%, and 78.6%. Traders apply the retracement by selecting a significant price move—such as a swing from a trough to a peak or from a peak to a trough—and drawing horizontal lines at these percentages to mark possible support or resistance as the price retraces part of the move.

Origins and basis: The method draws on the Fibonacci sequence and the golden ratio, which appear in various natural and mathematical contexts. In financial markets, the use of these ratios in price analysis emerged in the late 20th century and was popularized by traders and charting tools. The idea is that markets often retrace a portion of a move before continuing in the original direction, making the levels potential areas where price could pause, reverse, or consolidate.

Usage and application: To use Fibonacci retracement, a trader identifies a major price move, measures its extent, and applies the retracement levels to identify potential entry points, stop levels, and target areas. Levels are commonly combined with other indicators, trendlines, or chart patterns to improve decision-making and risk management.

Limitations: Retracements are not predictive guarantees. Effectiveness depends on choosing the correct swing points and time frame, and levels can become self-fulfilling as many traders watch the same lines. They should be used as part of a broader trading plan with appropriate risk controls.

Variations: Some charting tools also offer Fibonacci extensions, arcs, and fans, which extend the same mathematical concept to project targets or illustrate potential support and resistance in different formats. It is widely used across asset classes such as stocks, currencies, and commodities.