Fibonacci retracement
Also called: Fibonacci
Levels at 23.6%, 38.2%, 50%, 61.8% and 78.6% of a prior swing, used to estimate where a pullback may pause.
In practice
EUR/USD rallies from 1.0700 to 1.0900. The 50% and 61.8% retracements sit near 1.0800 and 1.0776, and a trader looks for a reaction there before buying.
Drawing Fibonacci on random swings until a level fits. Use clear, obvious swings on the timeframe you trade.
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