Fibonacci Retracement Levels

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The Fibonacci sequence is a series of numbers that are commonly used in technical analysis to identify potential levels of support and resistance in financial markets. The sequence was first introduced by Leonardo Fibonacci, an Italian mathematician, in the 13th century.

The Fibonacci sequence starts with 0 and 1, and each subsequent number in the sequence is the sum of the two preceding numbers. The most commonly used numbers in technical analysis are: 0, 23.6%, 38.2%, 50%, 61.8%, and 100%.

A Fibonacci retracement level of 60% refers to a specific point in a stock's price movement that is calculated based on the relationship between the price high and low of a stock over a specific period of time. Traders often use this level to help identify potential areas where the stock's price could potentially experience a rebound or reversal.

In technical analysis, the Fibonacci sequence is used to identify potential levels of support and resistance in price charts. For example, if an asset's price has fallen and then begins to rise, a trader might use Fibonacci levels to estimate potential levels at which the price might encounter resistance and potentially reverse direction.

Similarly, if an asset's price has risen and then begins to fall, a trader might use Fibonacci levels to estimate potential levels at which the price might find support and potentially reverse direction.

It's worth noting that the use of Fibonacci levels is just one tool that traders use in their analysis, and it's not always accurate. Additionally, different traders may have different interpretations of the significance of Fibonacci levels and may use them in different ways in their trading strategies.

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