Fibonacci Retracements

Fibonacci retracements are a technical analysis tool based on the mathematical sequence where each number is the sum of the two preceding ones, used to identify potential levels of support and resistance. Traders apply these ratios ⎊ most commonly 23.6%, 38.2%, 50%, and 61.8% ⎊ to price charts to predict where a trend might pause or reverse.

In the context of cryptocurrency, these levels are widely used by market participants, creating a self-fulfilling prophecy where price action often reacts to these zones. These levels are useful for setting entry and exit points, as they provide a logical framework for market structure.

While not a standalone predictor, they are highly effective when combined with other indicators like volume or trend lines. Understanding the physics of these retracements helps traders anticipate where liquidity might enter the market to push the price in a new direction.