Fibonacci Retracements

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Fibonacci Retracements are a very popular tool used by technical analysts to define areas of support and resistance. They can be used to identify the potential retracement of a security's original move in price. To create a Fibonacci Retracement, two Trend Lines are drawn horizontally at extreme points. The vertical distance between the two Trend Lines is then divided by Fibonacci ratios, typically 23.6%, 38.2%, 61.8% and 100%.