Currently strong resistance at .382 level on 4-hours chart.
What is a 'Fibonacci Retracement'
A is a term used in that refers to areas of support (price stops going lower) or resistance (price stops going higher). levels use horizontal lines to indicate areas of support or resistance at the key Fibonacci levels before the trend continues in the original direction. These levels are created by drawing a between the high and low and then dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%.
BREAKING DOWN 'Fibonacci Retracement'
is a very popular tool used by many technical traders to help identify strategic places for transactions to be placed, target prices or stop losses. The notion of retracement is used in many indicators such as Tirone levels, patterns, theory and more. After a significant price movement up or down, the new levels are often at or near these lines.
levels are static prices that do not change, unlike moving averages. The static nature of the price levels allows for quick and easy identification. This allows traders and investors to anticipate and react prudently when the price levels are tested. These levels are inflection points where some type of price action is expected, either a rejection or a break.
price levels can be used as buy triggers on pullbacks during an uptrend. It is prudent to have a like or a oscillator to pinpoint the most advantageous entries. In downtrends, the levels can be used to short sell when bounces reject off a level. When a price level overlaps with other indicator price levels like a 200-day moving average, then it becomes a fortified price level, making it an even stronger support or resistance.
The most significant level to watch for is the 0.618. This is the inverse of the golden ratio, 1.618 or phi. The level tends to be the maximum pullback zone where fear climaxes as the final sellers throw in the towel and bargain hunters rush into the stock to resume the uptrend. On downtrends, the 0.618 price level should be where the final buyers are exhausted as sellers take the opportunity to unload their positions and short-sellers jump off the fence to push down the price and resume the downtrend. Some traders prefer to wait for two to three closes above or below a level to confirm support or resistance before placing a trade.
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