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Calculated Shard: 148 (from laksa095)

2. Crawled Status Check

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curl -X POST \
  'http://laksa148.int.ahrefs:8124/' \
  -H 'Content-Type: text/plain' \
  -H 'X-ClickHouse-Database: crawler3' \
  -H 'Authorization: Basic YXBpOg==' \
  -d 'SELECT getAhrefsURLFromUnparsed(src_unparsed) AS found_url, ifNull(toUnixTimestamp(download_stamp), 0) AS crawl_time, ifNull(toUnixTimestamp(props_url_first_seen), 0) AS first_indexed_time, download_http_code AS http_code, src_unparsed AS src_unparsed, src_root_hash AS src_root_hash, history_drop_reason AS history_drop_reason, meta_title AS meta_title, meta_descriptions AS meta_descriptions, attrs_boilerpipe_text AS attrs_boilerpipe_text, attrs_markdown AS attrs_markdown, attrs_readable_markdown AS attrs_readable_markdown, meta_canonical AS meta_canonical FROM crawler3.page_info_local FINAL PREWHERE (src_root_hash, src_unparsed) IN ((getAhrefsRootHashFromUnparsed(getAhrefsUnparsedNoserviceFromURL(\'https://www.investopedia.com/ask/answers/05/fibonacciretracement.asp\')), getAhrefsUnparsedNoserviceFromURL(\'https://www.investopedia.com/ask/answers/05/fibonacciretracement.asp\'))) FORMAT JSONEachRow'

Response:

{"found_url":"https:\/\/www.investopedia.com\/ask\/answers\/05\/fibonacciretracement.asp","crawl_time":1776596582,"first_indexed_time":1506517524,"http_code":200,"src_unparsed":"com,investopedia!www,\/ask\/answers\/05\/fibonacciretracement.asp s443","src_root_hash":"7273739457760125548","history_drop_reason":null,"meta_title":"Understanding Fibonacci Retracements and Ratios for Trading Success","meta_descriptions":["Discover how Fibonacci retracements and ratios can help traders draw support lines, identify resistance levels, and optimize trading strategies for better outcomes."],"attrs_boilerpipe_text":"Fibonacci retracements help technical traders predict potential market movements by identifying likely\nsupport\nand\nresistance\nlevels on stock charts. Based on the historically significant Fibonacci sequence, ratios like 23.6%, 38.2%, 50%, and 61.8% are used to estimate how far prices may retrace before continuing a trend.\nTraders often use these levels to determine where to place stop-loss orders and set target prices to improve their trading strategies.\nFibonacci retracements\nare commonly used with other technical indicators to confirm signals and guide decision-making.\nKey Takeaways\nFibonacci retracements help traders identify potential support and resistance levels by using key Fibonacci ratios.\nThese ratios, like 23.6%, 38.2%, and 61.8%, are derived from the Fibonacci sequence and are central to technical analysis.\nFibonacci retracements are widely used due to their simplicity and applicability across various trading instruments.\nWhile popular, Fibonacci retracements should be used alongside other indicators for better accuracy.\nThe tool is subjective, and its efficacy may vary, with some traders finding it unreliable.\nGet personalized, AI-powered answers built on 27+ years of trusted expertise.\nUnderstanding Fibonacci Ratios in Trading \nBefore we can understand why these ratios were chosen, let's review the Fibonacci number series.\nThe\nFibonacci sequence\nof numbers is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. Each term in this sequence is simply the sum of the two preceding terms, and the sequence continues infinitely. One of the remarkable characteristics of this numerical sequence is that each number is approximately 1.618 times greater than the preceding number. This common relationship between every number in the series is the foundation of the ratios used by technical traders to determine\nretracement\nlevels.\nThe key Fibonacci ratio of 61.8% is found by dividing one number in the series by the number that follows it. For example, 21 divided by 34 equals 0.6176, and 55 divided by 89 equals about 0.61798.\nThe 38.2% ratio is discovered by dividing a number in the series by the number located two spots to the right. For instance, 55 divided by 144 equals approximately 0.38194.\nThe 23.6% ratio is found by dividing one number in the series by the number that is three places to the right. For example, 8 divided by 34 equals about 0.23529.\nUsing Fibonacci Retracement to Forecast Stock Price Movements\nFor unknown reasons, these Fibonacci ratios seem to play a role in the stock market, just as they do in nature. Technical traders attempt to use them to determine critical points where an asset's price momentum is likely to reverse.\nThe best brokers for day traders\ncan further aid investors trying to predict stock prices via Fibonacci retracements.\nFibonacci\nretracements are the most widely used\nof all the Fibonacci trading tools. That is partly because of their relative simplicity and partly due to their applicability to almost any trading instrument. They can be used to draw support lines, identify resistance levels, place\nstop-loss orders\n, and set target prices. Fibonacci ratios can even act as a primary mechanism in a\ncountertrend trading\nstrategy.\nFibonacci retracement levels are horizontal lines that indicate the possible locations of support and resistance levels. Each level is associated with one of the above ratios or percentages. It shows how much of a prior move the price has retraced. The direction of the previous trend is likely to continue. However, the price of the asset usually retraces to one of the ratios listed above before that happens.\nThe following chart illustrates how a Fibonacci retracement appears. Most modern trading platforms contain a tool that automatically draws in the horizontal lines. Notice how the price changes direction as it approaches the support and resistance levels.\nImage by Sabrina Jiang © Investopedia 2020\nAside from the mentioned ratios, many traders also use the 50% level.\nImportant\nThe 50% retracement level is not really a Fibonacci ratio. However, traders often use it because of the tendency of asset prices to continue in a particular direction after a 50% retracement.\nPros and Cons of Fibonacci Retracement in Trading\nAlthough popular, Fibonacci retracements have conceptual and technical drawbacks traders should know.\nUsing Fibonacci retracement is subjective. Traders use it differently; some find it effective, while others see it as unreliable. Others argue that technical analysis is a case of a\nself-fulfilling prophecy\n. If traders are all watching and using the same Fibonacci ratios or other technical indicators, the price action may reflect that fact.\nFibonacci tools are based on a numerical anomaly without logical proof. The ratios, integers, sequences, and formulas derived from the Fibonacci sequence are only the product of a mathematical process. That does not make Fibonacci trading inherently unreliable. However, it can be uncomfortable for traders who want to understand the rationale behind a strategy.\nAdditionally, Fibonacci retracement can only suggest possible\ncorrections\n, reversals, and countertrend bounces but struggles to confirm other indicators or provide clear signals.\nPros and Cons of Fibonacci Retracement\nPros\nFibonacci ratios provide a simple mathematical way to predict support and resistance\nMany traders base their decisions on Fibonacci retracements, making their predictions self-fulfilling\nCons\nThere is no logical reason why Fibonacci levels should provide more reliable resistance than other levels.\nThe system does not provide confirmations or strong or weak signals.\nWhy Does the Fibonacci Retracement Work?\nIt works because it allows traders to identify and place trades within powerful, long-term price trends by determining when an asset's price is likely to switch course.\nWhat Is the Time Interval In Trading Stocks for a Fibonacci Sequence?\nFibonacci retracements can be used on a variety of timeframes. However, they are more effective on somewhat longer timeframes, such as a weekly chart vs. a 30-minute chart.\nHow Do You Use a Fibonacci Retracement?\nA technical analyst looking for potential\nsupport and resistance\nlevels will select two prominent points from a stock's chart, typically the highest and lowest points over a set period of time, and divide the vertical distance by key Fibonacci ratios. With the levels identified, horizontal lines are drawn, enabling market makers to identify trading opportunities.\nThe Bottom Line\nFibonacci retracements can help you identify important support and resistance levels in trading, using ratios derived from the mathematically significant Fibonacci sequence. While simple and can be broadly applied, they are limited, as they may not provide strong confirmations on their own. Many traders combine Fibonacci retracements with other technical tools and signals.","attrs_markdown":"\n\n[Skip to content](https:\/\/www.investopedia.com\/ask\/answers\/05\/fibonacciretracement.asp#main)\n\n[Investopedia](https:\/\/www.investopedia.com\/)\n\n[Trade](https:\/\/www.investopedia.com\/simulator\/?inv_to_sim=global_nav)\n\n- Please fill out this field.\n- [Newsletters](https:\/\/www.investopedia.com\/ask\/answers\/05\/fibonacciretracement.asp)\n\nPlease fill out this field.\n\n- [News](https:\/\/www.investopedia.com\/news-4427706)\n  News\n  \n  - [Markets](https:\/\/www.investopedia.com\/markets-news-4427704)\n  - [Companies](https:\/\/www.investopedia.com\/company-news-4427705)\n  - [Earnings](https:\/\/www.investopedia.com\/earnings-reports-5218419)\n  - [CD Rates](https:\/\/www.investopedia.com\/certificates-deposit-news-7111770)\n  - [Mortgage Rates](https:\/\/www.investopedia.com\/mortgage-rates-5184598)\n  - [Economy](https:\/\/www.investopedia.com\/economic-news-5218422)\n  - 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[Best Mortgage Rates](https:\/\/www.investopedia.com\/mortgage-rates-5094943)\n  - [Best Robo-Advisors](https:\/\/www.investopedia.com\/the-best-robo-advisors-8764849)\n  - [Best Personal Loans](https:\/\/www.investopedia.com\/the-best-personal-loans-8761582)\n  - [Best Debt Relief Companies](https:\/\/www.investopedia.com\/the-best-debt-relief-companies-8763179)\n  - [View All](https:\/\/www.investopedia.com\/financial-product-reviews-7110783)\n\n- Top Stories\n- [62% of Workers Have Resume Gaps](https:\/\/www.investopedia.com\/resume-gaps-affect-62-of-workers-here-s-how-to-re-enter-the-workforce-confidentl-1775758396040-11946772)\n- [Bad Credit Can Cost You a Job, But Not Here](https:\/\/www.investopedia.com\/bad-credit-can-still-cost-you-a-job-but-not-if-you-live-in-one-of-these-states-11949561)\n- [Why Inheriting a Home May Not Guarantee Security](https:\/\/www.investopedia.com\/great-wealth-transfer-why-inheriting-a-home-may-not-make-you-rich-1775758393915-11946766)\n- [50% of Americans in Peak Earning Years Fear They Can't Retire](https:\/\/www.investopedia.com\/nearly-50-percent-of-americans-in-peak-earning-years-worry-they-wont-be-able-to-retire-11946768)\n\nTable of Contents\n\nExpand\n\nTable of Contents\n\n- [Fibonacci Ratios in Trading](https:\/\/www.investopedia.com\/ask\/answers\/05\/fibonacciretracement.asp#toc-understanding-fibonacci-ratios-in-trading)\n- [Predicting Stock Prices](https:\/\/www.investopedia.com\/ask\/answers\/05\/fibonacciretracement.asp#toc-using-fibonacci-retracement-to-forecast-stock-price-movements)\n- [Pros and Cons](https:\/\/www.investopedia.com\/ask\/answers\/05\/fibonacciretracement.asp#toc-pros-and-cons-of-fibonacci-retracement-in-trading)\n- [FAQs](https:\/\/www.investopedia.com\/ask\/answers\/05\/fibonacciretracement.asp#toc-why-does-the-fibonacci-retracement-work)\n- [The Bottom Line](https:\/\/www.investopedia.com\/ask\/answers\/05\/fibonacciretracement.asp#toc-the-bottom-line)\n\n# Understanding Fibonacci Retracements and Ratios for Trading Success\nBy\n\n[Casey Murphy](https:\/\/www.investopedia.com\/contributors\/53408\/)\n\n![]()\n\n![](https:\/\/www.investopedia.com\/thmb\/B2G5IuQ6fMBfZ4f1iAT-URsvjSo=\/200x200\/filters:no_upscale\\(\\):max_bytes\\(150000\\):strip_icc\\(\\)\/caseymprofile__casey_murphy-5bfc262846e0fb0026006b17.jpg)\n\n[Full Bio](https:\/\/www.investopedia.com\/contributors\/53408\/)\n\nCasey Murphy has fanned his passion for finance through years of writing about active trading, technical analysis, market commentary, exchange-traded funds (ETFs), commodities, futures, options, and forex (FX).\n\nLearn about our  [editorial policies](https:\/\/www.investopedia.com\/legal-4768893#editorial-policy)\n\nUpdated November 01, 2025\n\nReviewed by\n\n[Khadija Khartit](https:\/\/www.investopedia.com\/khadija-khartit-4799776)\n\n![Khadija Khartit]()\n\n![Khadija Khartit](https:\/\/www.investopedia.com\/thmb\/W2re2_rNx_MIW9RPQv9BMFNHVH4=\/200x200\/filters:no_upscale\\(\\):max_bytes\\(150000\\):strip_icc\\(\\)\/Pic1-KhadijaKhartit-cc5b57fba2bd46ed87bdb3ddbcd2ef69.jpg)\n\nReviewed by Khadija Khartit\n\n[Full Bio](https:\/\/www.investopedia.com\/khadija-khartit-4799776)\n\nKhadija Khartit is a strategy, investment, and funding expert, and an educator of fintech and strategic finance in top universities. She has been an investor, entrepreneur, and advisor for more than 25 years. She is a FINRA Series 7, 63, and 66 license holder.\n\nLearn about our  [Financial Review Board](https:\/\/www.investopedia.com\/investopedia-financial-review-board-5076269)\n\nFact checked by\n\n[David Rubin](https:\/\/www.investopedia.com\/david-ruben-8387751)\n\n![David Rubin bio photo]()\n\n![David Rubin bio photo](https:\/\/www.investopedia.com\/thmb\/ge7K64QSvLHkkVYRCpNJLfj7Ckc=\/200x200\/filters:no_upscale\\(\\):max_bytes\\(150000\\):strip_icc\\(\\)\/DavidRubinbiophoto-720c26a0862f4b3e86e1d2036ffcf10f.jpg)\n\nFact checked by David Rubin\n\n[Full Bio](https:\/\/www.investopedia.com\/david-ruben-8387751)\n\nDavid is comprehensively experienced in many facets of financial and legal research and publishing. As an Investopedia fact checker since 2020, he has validated over 1,100 articles on a wide range of financial and investment topics.\n\nLearn about our  [editorial policies](https:\/\/www.investopedia.com\/legal-4768893#editorial-policy)\n\nFibonacci retracements help technical traders predict potential market movements by identifying likely [support](https:\/\/www.investopedia.com\/terms\/s\/support.asp) and [resistance](https:\/\/www.investopedia.com\/terms\/r\/resistance.asp) levels on stock charts. Based on the historically significant Fibonacci sequence, ratios like 23.6%, 38.2%, 50%, and 61.8% are used to estimate how far prices may retrace before continuing a trend. Traders often use these levels to determine where to place stop-loss orders and set target prices to improve their trading strategies. [Fibonacci retracements](https:\/\/www.investopedia.com\/terms\/f\/fibonacciretracement.asp) are commonly used with other technical indicators to confirm signals and guide decision-making.\n\n### Key Takeaways\n- Fibonacci retracements help traders identify potential support and resistance levels by using key Fibonacci ratios.\n- These ratios, like 23.6%, 38.2%, and 61.8%, are derived from the Fibonacci sequence and are central to technical analysis.\n- Fibonacci retracements are widely used due to their simplicity and applicability across various trading instruments.\n- While popular, Fibonacci retracements should be used alongside other indicators for better accuracy.\n- The tool is subjective, and its efficacy may vary, with some traders finding it unreliable.\n\nGet personalized, AI-powered answers built on 27+ years of trusted expertise.\n\nASK\n## Understanding Fibonacci Ratios in Trading\nBefore we can understand why these ratios were chosen, let's review the Fibonacci number series.\n\nThe [Fibonacci sequence](https:\/\/www.investopedia.com\/articles\/technical\/04\/033104.asp) of numbers is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. Each term in this sequence is simply the sum of the two preceding terms, and the sequence continues infinitely. One of the remarkable characteristics of this numerical sequence is that each number is approximately 1.618 times greater than the preceding number. This common relationship between every number in the series is the foundation of the ratios used by technical traders to determine [retracement](https:\/\/www.investopedia.com\/terms\/r\/retracement.asp) levels.\n\nThe key Fibonacci ratio of 61.8% is found by dividing one number in the series by the number that follows it. For example, 21 divided by 34 equals 0.6176, and 55 divided by 89 equals about 0.61798.\n\nThe 38.2% ratio is discovered by dividing a number in the series by the number located two spots to the right. For instance, 55 divided by 144 equals approximately 0.38194.\n\nThe 23.6% ratio is found by dividing one number in the series by the number that is three places to the right. For example, 8 divided by 34 equals about 0.23529.\n\n## Using Fibonacci Retracement to Forecast Stock Price Movements\nFor unknown reasons, these Fibonacci ratios seem to play a role in the stock market, just as they do in nature. Technical traders attempt to use them to determine critical points where an asset's price momentum is likely to reverse. [The best brokers for day traders](https:\/\/www.investopedia.com\/the-best-brokers-for-day-trading-8762913) can further aid investors trying to predict stock prices via Fibonacci retracements.\n\nFibonacci [retracements are the most widely used](https:\/\/www.investopedia.com\/articles\/active-trading\/091114\/strategies-trading-fibonacci-retracements.asp) of all the Fibonacci trading tools. That is partly because of their relative simplicity and partly due to their applicability to almost any trading instrument. They can be used to draw support lines, identify resistance levels, place [stop-loss orders](https:\/\/www.investopedia.com\/terms\/s\/stop-lossorder.asp), and set target prices. Fibonacci ratios can even act as a primary mechanism in a [countertrend trading](https:\/\/www.investopedia.com\/terms\/c\/countertrend.asp) strategy.\n\nFibonacci retracement levels are horizontal lines that indicate the possible locations of support and resistance levels. Each level is associated with one of the above ratios or percentages. It shows how much of a prior move the price has retraced. The direction of the previous trend is likely to continue. However, the price of the asset usually retraces to one of the ratios listed above before that happens.\n\nThe following chart illustrates how a Fibonacci retracement appears. Most modern trading platforms contain a tool that automatically draws in the horizontal lines. Notice how the price changes direction as it approaches the support and resistance levels.\n\n![Image]()\n\n![Image](https:\/\/www.investopedia.com\/thmb\/oHAtUCZ7nmnJ45xDYjSHUizuV6I=\/1500x0\/filters:no_upscale\\(\\):max_bytes\\(150000\\):strip_icc\\(\\)\/dotdash_Final_What_Are_Fibonacci_Retracements_and_Fibonacci_Ratios_Sep_2020-01-7b1bf4a68da246f7ace93f2ca9d64233.jpg)\n\nImage by Sabrina Jiang © Investopedia 2020\n\nAside from the mentioned ratios, many traders also use the 50% level.\n\n### Important\nThe 50% retracement level is not really a Fibonacci ratio. However, traders often use it because of the tendency of asset prices to continue in a particular direction after a 50% retracement.\n## Pros and Cons of Fibonacci Retracement in Trading\nAlthough popular, Fibonacci retracements have conceptual and technical drawbacks traders should know.\n\nUsing Fibonacci retracement is subjective. Traders use it differently; some find it effective, while others see it as unreliable. Others argue that technical analysis is a case of a [self-fulfilling prophecy](https:\/\/www.investopedia.com\/ask\/answers\/05\/selffulfillingprophecy.asp). If traders are all watching and using the same Fibonacci ratios or other technical indicators, the price action may reflect that fact.\n\nFibonacci tools are based on a numerical anomaly without logical proof. The ratios, integers, sequences, and formulas derived from the Fibonacci sequence are only the product of a mathematical process. That does not make Fibonacci trading inherently unreliable. However, it can be uncomfortable for traders who want to understand the rationale behind a strategy.\n\nAdditionally, Fibonacci retracement can only suggest possible [corrections](https:\/\/www.investopedia.com\/terms\/c\/correction.asp), reversals, and countertrend bounces but struggles to confirm other indicators or provide clear signals.\n\n### Pros and Cons of Fibonacci Retracement\nPros\n\n- Fibonacci ratios provide a simple mathematical way to predict support and resistance\n- Many traders base their decisions on Fibonacci retracements, making their predictions self-fulfilling\n\nCons\n\n- There is no logical reason why Fibonacci levels should provide more reliable resistance than other levels.\n- The system does not provide confirmations or strong or weak signals.\n\n## Why Does the Fibonacci Retracement Work?\nIt works because it allows traders to identify and place trades within powerful, long-term price trends by determining when an asset's price is likely to switch course.\n\n## What Is the Time Interval In Trading Stocks for a Fibonacci Sequence?\nFibonacci retracements can be used on a variety of timeframes. However, they are more effective on somewhat longer timeframes, such as a weekly chart vs. a 30-minute chart.\n\n## How Do You Use a Fibonacci Retracement?\nA technical analyst looking for potential [support and resistance](https:\/\/www.investopedia.com\/trading\/support-and-resistance-basics\/) levels will select two prominent points from a stock's chart, typically the highest and lowest points over a set period of time, and divide the vertical distance by key Fibonacci ratios. With the levels identified, horizontal lines are drawn, enabling market makers to identify trading opportunities.\n## The Bottom Line\nFibonacci retracements can help you identify important support and resistance levels in trading, using ratios derived from the mathematically significant Fibonacci sequence. While simple and can be broadly applied, they are limited, as they may not provide strong confirmations on their own. Many traders combine Fibonacci retracements with other technical tools and signals.\n\nGet personalized, AI-powered answers built on 27+ years of trusted expertise.\n\nASK\n\nArticle Sources\n\nInvestopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our [editorial policy.](https:\/\/www.investopedia.com\/legal-4768893#EditorialPolicy)\n\n1. CMC Markets. \"[How To Trade With Fibonacci](https:\/\/www.cmcmarkets.com\/en\/trading-guides\/how-to-trade-with-fibonacci).\"\n2. Britannica. \"[Fibonacci Sequence](https:\/\/www.britannica.com\/science\/Fibonacci-number).\"\n3. StockCharts. \"[Fibonacci Retracements](https:\/\/chartschool.stockcharts.com\/table-of-contents\/chart-analysis\/chart-annotation-tools\/fibonacci-retracements).\"\n4. CMC Markets. \"[How To Trade With Fibonacci](https:\/\/www.cmcmarkets.com\/en\/trading-guides\/how-to-trade-with-fibonacci).\"\n\nCompare Accounts\n\nAdvertiser Disclosure\n\n×\n\nThe offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. 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[W](https:\/\/www.investopedia.com\/terms-beginning-with-w-4769373)\n- [X](https:\/\/www.investopedia.com\/terms-beginning-with-x-4769374)\n- [Y](https:\/\/www.investopedia.com\/terms-beginning-with-y-4769375)\n- [Z](https:\/\/www.investopedia.com\/terms-beginning-with-z-4769376)\n\nInvestopedia is part of the [People Inc.](https:\/\/www.people.inc\/) publishing family.\n\nNewsletter Sign Up\n\nNewsletter Sign Up","attrs_readable_markdown":"Fibonacci retracements help technical traders predict potential market movements by identifying likely [support](https:\/\/www.investopedia.com\/terms\/s\/support.asp) and [resistance](https:\/\/www.investopedia.com\/terms\/r\/resistance.asp) levels on stock charts. Based on the historically significant Fibonacci sequence, ratios like 23.6%, 38.2%, 50%, and 61.8% are used to estimate how far prices may retrace before continuing a trend. Traders often use these levels to determine where to place stop-loss orders and set target prices to improve their trading strategies. [Fibonacci retracements](https:\/\/www.investopedia.com\/terms\/f\/fibonacciretracement.asp) are commonly used with other technical indicators to confirm signals and guide decision-making.\n\n### Key Takeaways\n- Fibonacci retracements help traders identify potential support and resistance levels by using key Fibonacci ratios.\n- These ratios, like 23.6%, 38.2%, and 61.8%, are derived from the Fibonacci sequence and are central to technical analysis.\n- Fibonacci retracements are widely used due to their simplicity and applicability across various trading instruments.\n- While popular, Fibonacci retracements should be used alongside other indicators for better accuracy.\n- The tool is subjective, and its efficacy may vary, with some traders finding it unreliable.\n\nGet personalized, AI-powered answers built on 27+ years of trusted expertise.\n## Understanding Fibonacci Ratios in Trading\nBefore we can understand why these ratios were chosen, let's review the Fibonacci number series.\n\nThe [Fibonacci sequence](https:\/\/www.investopedia.com\/articles\/technical\/04\/033104.asp) of numbers is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. Each term in this sequence is simply the sum of the two preceding terms, and the sequence continues infinitely. One of the remarkable characteristics of this numerical sequence is that each number is approximately 1.618 times greater than the preceding number. This common relationship between every number in the series is the foundation of the ratios used by technical traders to determine [retracement](https:\/\/www.investopedia.com\/terms\/r\/retracement.asp) levels.\n\nThe key Fibonacci ratio of 61.8% is found by dividing one number in the series by the number that follows it. For example, 21 divided by 34 equals 0.6176, and 55 divided by 89 equals about 0.61798.\n\nThe 38.2% ratio is discovered by dividing a number in the series by the number located two spots to the right. For instance, 55 divided by 144 equals approximately 0.38194.\n\nThe 23.6% ratio is found by dividing one number in the series by the number that is three places to the right. For example, 8 divided by 34 equals about 0.23529.\n\n## Using Fibonacci Retracement to Forecast Stock Price Movements\nFor unknown reasons, these Fibonacci ratios seem to play a role in the stock market, just as they do in nature. Technical traders attempt to use them to determine critical points where an asset's price momentum is likely to reverse. [The best brokers for day traders](https:\/\/www.investopedia.com\/the-best-brokers-for-day-trading-8762913) can further aid investors trying to predict stock prices via Fibonacci retracements.\n\nFibonacci [retracements are the most widely used](https:\/\/www.investopedia.com\/articles\/active-trading\/091114\/strategies-trading-fibonacci-retracements.asp) of all the Fibonacci trading tools. That is partly because of their relative simplicity and partly due to their applicability to almost any trading instrument. They can be used to draw support lines, identify resistance levels, place [stop-loss orders](https:\/\/www.investopedia.com\/terms\/s\/stop-lossorder.asp), and set target prices. Fibonacci ratios can even act as a primary mechanism in a [countertrend trading](https:\/\/www.investopedia.com\/terms\/c\/countertrend.asp) strategy.\n\nFibonacci retracement levels are horizontal lines that indicate the possible locations of support and resistance levels. Each level is associated with one of the above ratios or percentages. It shows how much of a prior move the price has retraced. The direction of the previous trend is likely to continue. However, the price of the asset usually retraces to one of the ratios listed above before that happens.\n\nThe following chart illustrates how a Fibonacci retracement appears. Most modern trading platforms contain a tool that automatically draws in the horizontal lines. Notice how the price changes direction as it approaches the support and resistance levels.\n\nImage by Sabrina Jiang © Investopedia 2020\n\nAside from the mentioned ratios, many traders also use the 50% level.\n\n### Important\nThe 50% retracement level is not really a Fibonacci ratio. However, traders often use it because of the tendency of asset prices to continue in a particular direction after a 50% retracement.\n## Pros and Cons of Fibonacci Retracement in Trading\nAlthough popular, Fibonacci retracements have conceptual and technical drawbacks traders should know.\n\nUsing Fibonacci retracement is subjective. Traders use it differently; some find it effective, while others see it as unreliable. Others argue that technical analysis is a case of a [self-fulfilling prophecy](https:\/\/www.investopedia.com\/ask\/answers\/05\/selffulfillingprophecy.asp). If traders are all watching and using the same Fibonacci ratios or other technical indicators, the price action may reflect that fact.\n\nFibonacci tools are based on a numerical anomaly without logical proof. The ratios, integers, sequences, and formulas derived from the Fibonacci sequence are only the product of a mathematical process. That does not make Fibonacci trading inherently unreliable. However, it can be uncomfortable for traders who want to understand the rationale behind a strategy.\n\nAdditionally, Fibonacci retracement can only suggest possible [corrections](https:\/\/www.investopedia.com\/terms\/c\/correction.asp), reversals, and countertrend bounces but struggles to confirm other indicators or provide clear signals.\n\n### Pros and Cons of Fibonacci Retracement\nPros\n\n- Fibonacci ratios provide a simple mathematical way to predict support and resistance\n- Many traders base their decisions on Fibonacci retracements, making their predictions self-fulfilling\n\nCons\n\n- There is no logical reason why Fibonacci levels should provide more reliable resistance than other levels.\n- The system does not provide confirmations or strong or weak signals.\n\n## Why Does the Fibonacci Retracement Work?\nIt works because it allows traders to identify and place trades within powerful, long-term price trends by determining when an asset's price is likely to switch course.\n\n## What Is the Time Interval In Trading Stocks for a Fibonacci Sequence?\nFibonacci retracements can be used on a variety of timeframes. However, they are more effective on somewhat longer timeframes, such as a weekly chart vs. a 30-minute chart.\n\n## How Do You Use a Fibonacci Retracement?\nA technical analyst looking for potential [support and resistance](https:\/\/www.investopedia.com\/trading\/support-and-resistance-basics\/) levels will select two prominent points from a stock's chart, typically the highest and lowest points over a set period of time, and divide the vertical distance by key Fibonacci ratios. With the levels identified, horizontal lines are drawn, enabling market makers to identify trading opportunities.\n## The Bottom Line\nFibonacci retracements can help you identify important support and resistance levels in trading, using ratios derived from the mathematically significant Fibonacci sequence. While simple and can be broadly applied, they are limited, as they may not provide strong confirmations on their own. Many traders combine Fibonacci retracements with other technical tools and signals.","meta_canonical":null}

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Boilerpipe Text	Fibonacci retracements help technical traders predict potential market movements by identifying likely support and resistance levels on stock charts. Based on the historically significant Fibonacci sequence, ratios like 23.6%, 38.2%, 50%, and 61.8% are used to estimate how far prices may retrace before continuing a trend. Traders often use these levels to determine where to place stop-loss orders and set target prices to improve their trading strategies. Fibonacci retracements are commonly used with other technical indicators to confirm signals and guide decision-making. Key Takeaways Fibonacci retracements help traders identify potential support and resistance levels by using key Fibonacci ratios. These ratios, like 23.6%, 38.2%, and 61.8%, are derived from the Fibonacci sequence and are central to technical analysis. Fibonacci retracements are widely used due to their simplicity and applicability across various trading instruments. While popular, Fibonacci retracements should be used alongside other indicators for better accuracy. The tool is subjective, and its efficacy may vary, with some traders finding it unreliable. Get personalized, AI-powered answers built on 27+ years of trusted expertise. Understanding Fibonacci Ratios in Trading Before we can understand why these ratios were chosen, let's review the Fibonacci number series. The Fibonacci sequence of numbers is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. Each term in this sequence is simply the sum of the two preceding terms, and the sequence continues infinitely. One of the remarkable characteristics of this numerical sequence is that each number is approximately 1.618 times greater than the preceding number. This common relationship between every number in the series is the foundation of the ratios used by technical traders to determine retracement levels. The key Fibonacci ratio of 61.8% is found by dividing one number in the series by the number that follows it. For example, 21 divided by 34 equals 0.6176, and 55 divided by 89 equals about 0.61798. The 38.2% ratio is discovered by dividing a number in the series by the number located two spots to the right. For instance, 55 divided by 144 equals approximately 0.38194. The 23.6% ratio is found by dividing one number in the series by the number that is three places to the right. For example, 8 divided by 34 equals about 0.23529. Using Fibonacci Retracement to Forecast Stock Price Movements For unknown reasons, these Fibonacci ratios seem to play a role in the stock market, just as they do in nature. Technical traders attempt to use them to determine critical points where an asset's price momentum is likely to reverse. The best brokers for day traders can further aid investors trying to predict stock prices via Fibonacci retracements. Fibonacci retracements are the most widely used of all the Fibonacci trading tools. That is partly because of their relative simplicity and partly due to their applicability to almost any trading instrument. They can be used to draw support lines, identify resistance levels, place stop-loss orders , and set target prices. Fibonacci ratios can even act as a primary mechanism in a countertrend trading strategy. Fibonacci retracement levels are horizontal lines that indicate the possible locations of support and resistance levels. Each level is associated with one of the above ratios or percentages. It shows how much of a prior move the price has retraced. The direction of the previous trend is likely to continue. However, the price of the asset usually retraces to one of the ratios listed above before that happens. The following chart illustrates how a Fibonacci retracement appears. Most modern trading platforms contain a tool that automatically draws in the horizontal lines. Notice how the price changes direction as it approaches the support and resistance levels. Image by Sabrina Jiang © Investopedia 2020 Aside from the mentioned ratios, many traders also use the 50% level. Important The 50% retracement level is not really a Fibonacci ratio. However, traders often use it because of the tendency of asset prices to continue in a particular direction after a 50% retracement. Pros and Cons of Fibonacci Retracement in Trading Although popular, Fibonacci retracements have conceptual and technical drawbacks traders should know. Using Fibonacci retracement is subjective. Traders use it differently; some find it effective, while others see it as unreliable. Others argue that technical analysis is a case of a self-fulfilling prophecy . If traders are all watching and using the same Fibonacci ratios or other technical indicators, the price action may reflect that fact. Fibonacci tools are based on a numerical anomaly without logical proof. The ratios, integers, sequences, and formulas derived from the Fibonacci sequence are only the product of a mathematical process. That does not make Fibonacci trading inherently unreliable. However, it can be uncomfortable for traders who want to understand the rationale behind a strategy. Additionally, Fibonacci retracement can only suggest possible corrections , reversals, and countertrend bounces but struggles to confirm other indicators or provide clear signals. Pros and Cons of Fibonacci Retracement Pros Fibonacci ratios provide a simple mathematical way to predict support and resistance Many traders base their decisions on Fibonacci retracements, making their predictions self-fulfilling Cons There is no logical reason why Fibonacci levels should provide more reliable resistance than other levels. The system does not provide confirmations or strong or weak signals. Why Does the Fibonacci Retracement Work? It works because it allows traders to identify and place trades within powerful, long-term price trends by determining when an asset's price is likely to switch course. What Is the Time Interval In Trading Stocks for a Fibonacci Sequence? Fibonacci retracements can be used on a variety of timeframes. However, they are more effective on somewhat longer timeframes, such as a weekly chart vs. a 30-minute chart. How Do You Use a Fibonacci Retracement? A technical analyst looking for potential support and resistance levels will select two prominent points from a stock's chart, typically the highest and lowest points over a set period of time, and divide the vertical distance by key Fibonacci ratios. With the levels identified, horizontal lines are drawn, enabling market makers to identify trading opportunities. The Bottom Line Fibonacci retracements can help you identify important support and resistance levels in trading, using ratios derived from the mathematically significant Fibonacci sequence. While simple and can be broadly applied, they are limited, as they may not provide strong confirmations on their own. Many traders combine Fibonacci retracements with other technical tools and signals.
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Learn about our [editorial policies](https://www.investopedia.com/legal-4768893#editorial-policy) Updated November 01, 2025 Reviewed by [Khadija Khartit](https://www.investopedia.com/khadija-khartit-4799776) ![Khadija Khartit]() ![Khadija Khartit](https://www.investopedia.com/thmb/W2re2_rNx_MIW9RPQv9BMFNHVH4=/200x200/filters:no_upscale\(\):max_bytes\(150000\):strip_icc\(\)/Pic1-KhadijaKhartit-cc5b57fba2bd46ed87bdb3ddbcd2ef69.jpg) Reviewed by Khadija Khartit [Full Bio](https://www.investopedia.com/khadija-khartit-4799776) Khadija Khartit is a strategy, investment, and funding expert, and an educator of fintech and strategic finance in top universities. She has been an investor, entrepreneur, and advisor for more than 25 years. She is a FINRA Series 7, 63, and 66 license holder. Learn about our [Financial Review Board](https://www.investopedia.com/investopedia-financial-review-board-5076269) Fact checked by [David Rubin](https://www.investopedia.com/david-ruben-8387751) ![David Rubin bio photo]() ![David Rubin bio photo](https://www.investopedia.com/thmb/ge7K64QSvLHkkVYRCpNJLfj7Ckc=/200x200/filters:no_upscale\(\):max_bytes\(150000\):strip_icc\(\)/DavidRubinbiophoto-720c26a0862f4b3e86e1d2036ffcf10f.jpg) Fact checked by David Rubin [Full Bio](https://www.investopedia.com/david-ruben-8387751) David is comprehensively experienced in many facets of financial and legal research and publishing. As an Investopedia fact checker since 2020, he has validated over 1,100 articles on a wide range of financial and investment topics. Learn about our [editorial policies](https://www.investopedia.com/legal-4768893#editorial-policy) Fibonacci retracements help technical traders predict potential market movements by identifying likely [support](https://www.investopedia.com/terms/s/support.asp) and [resistance](https://www.investopedia.com/terms/r/resistance.asp) levels on stock charts. Based on the historically significant Fibonacci sequence, ratios like 23.6%, 38.2%, 50%, and 61.8% are used to estimate how far prices may retrace before continuing a trend. Traders often use these levels to determine where to place stop-loss orders and set target prices to improve their trading strategies. [Fibonacci retracements](https://www.investopedia.com/terms/f/fibonacciretracement.asp) are commonly used with other technical indicators to confirm signals and guide decision-making. ### Key Takeaways - Fibonacci retracements help traders identify potential support and resistance levels by using key Fibonacci ratios. - These ratios, like 23.6%, 38.2%, and 61.8%, are derived from the Fibonacci sequence and are central to technical analysis. - Fibonacci retracements are widely used due to their simplicity and applicability across various trading instruments. - While popular, Fibonacci retracements should be used alongside other indicators for better accuracy. - The tool is subjective, and its efficacy may vary, with some traders finding it unreliable. Get personalized, AI-powered answers built on 27+ years of trusted expertise. ASK ## Understanding Fibonacci Ratios in Trading Before we can understand why these ratios were chosen, let's review the Fibonacci number series. The [Fibonacci sequence](https://www.investopedia.com/articles/technical/04/033104.asp) of numbers is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. Each term in this sequence is simply the sum of the two preceding terms, and the sequence continues infinitely. One of the remarkable characteristics of this numerical sequence is that each number is approximately 1.618 times greater than the preceding number. This common relationship between every number in the series is the foundation of the ratios used by technical traders to determine [retracement](https://www.investopedia.com/terms/r/retracement.asp) levels. The key Fibonacci ratio of 61.8% is found by dividing one number in the series by the number that follows it. For example, 21 divided by 34 equals 0.6176, and 55 divided by 89 equals about 0.61798. The 38.2% ratio is discovered by dividing a number in the series by the number located two spots to the right. For instance, 55 divided by 144 equals approximately 0.38194. The 23.6% ratio is found by dividing one number in the series by the number that is three places to the right. For example, 8 divided by 34 equals about 0.23529. ## Using Fibonacci Retracement to Forecast Stock Price Movements For unknown reasons, these Fibonacci ratios seem to play a role in the stock market, just as they do in nature. Technical traders attempt to use them to determine critical points where an asset's price momentum is likely to reverse. [The best brokers for day traders](https://www.investopedia.com/the-best-brokers-for-day-trading-8762913) can further aid investors trying to predict stock prices via Fibonacci retracements. Fibonacci [retracements are the most widely used](https://www.investopedia.com/articles/active-trading/091114/strategies-trading-fibonacci-retracements.asp) of all the Fibonacci trading tools. That is partly because of their relative simplicity and partly due to their applicability to almost any trading instrument. They can be used to draw support lines, identify resistance levels, place [stop-loss orders](https://www.investopedia.com/terms/s/stop-lossorder.asp), and set target prices. Fibonacci ratios can even act as a primary mechanism in a [countertrend trading](https://www.investopedia.com/terms/c/countertrend.asp) strategy. Fibonacci retracement levels are horizontal lines that indicate the possible locations of support and resistance levels. Each level is associated with one of the above ratios or percentages. It shows how much of a prior move the price has retraced. The direction of the previous trend is likely to continue. However, the price of the asset usually retraces to one of the ratios listed above before that happens. The following chart illustrates how a Fibonacci retracement appears. Most modern trading platforms contain a tool that automatically draws in the horizontal lines. Notice how the price changes direction as it approaches the support and resistance levels. ![Image]() ![Image](https://www.investopedia.com/thmb/oHAtUCZ7nmnJ45xDYjSHUizuV6I=/1500x0/filters:no_upscale\(\):max_bytes\(150000\):strip_icc\(\)/dotdash_Final_What_Are_Fibonacci_Retracements_and_Fibonacci_Ratios_Sep_2020-01-7b1bf4a68da246f7ace93f2ca9d64233.jpg) Image by Sabrina Jiang © Investopedia 2020 Aside from the mentioned ratios, many traders also use the 50% level. ### Important The 50% retracement level is not really a Fibonacci ratio. However, traders often use it because of the tendency of asset prices to continue in a particular direction after a 50% retracement. ## Pros and Cons of Fibonacci Retracement in Trading Although popular, Fibonacci retracements have conceptual and technical drawbacks traders should know. Using Fibonacci retracement is subjective. Traders use it differently; some find it effective, while others see it as unreliable. Others argue that technical analysis is a case of a [self-fulfilling prophecy](https://www.investopedia.com/ask/answers/05/selffulfillingprophecy.asp). If traders are all watching and using the same Fibonacci ratios or other technical indicators, the price action may reflect that fact. Fibonacci tools are based on a numerical anomaly without logical proof. The ratios, integers, sequences, and formulas derived from the Fibonacci sequence are only the product of a mathematical process. That does not make Fibonacci trading inherently unreliable. However, it can be uncomfortable for traders who want to understand the rationale behind a strategy. Additionally, Fibonacci retracement can only suggest possible [corrections](https://www.investopedia.com/terms/c/correction.asp), reversals, and countertrend bounces but struggles to confirm other indicators or provide clear signals. ### Pros and Cons of Fibonacci Retracement Pros - Fibonacci ratios provide a simple mathematical way to predict support and resistance - Many traders base their decisions on Fibonacci retracements, making their predictions self-fulfilling Cons - There is no logical reason why Fibonacci levels should provide more reliable resistance than other levels. - The system does not provide confirmations or strong or weak signals. ## Why Does the Fibonacci Retracement Work? It works because it allows traders to identify and place trades within powerful, long-term price trends by determining when an asset's price is likely to switch course. ## What Is the Time Interval In Trading Stocks for a Fibonacci Sequence? Fibonacci retracements can be used on a variety of timeframes. However, they are more effective on somewhat longer timeframes, such as a weekly chart vs. a 30-minute chart. ## How Do You Use a Fibonacci Retracement? A technical analyst looking for potential [support and resistance](https://www.investopedia.com/trading/support-and-resistance-basics/) levels will select two prominent points from a stock's chart, typically the highest and lowest points over a set period of time, and divide the vertical distance by key Fibonacci ratios. With the levels identified, horizontal lines are drawn, enabling market makers to identify trading opportunities. ## The Bottom Line Fibonacci retracements can help you identify important support and resistance levels in trading, using ratios derived from the mathematically significant Fibonacci sequence. While simple and can be broadly applied, they are limited, as they may not provide strong confirmations on their own. Many traders combine Fibonacci retracements with other technical tools and signals. Get personalized, AI-powered answers built on 27+ years of trusted expertise. ASK Article Sources Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our [editorial policy.](https://www.investopedia.com/legal-4768893#EditorialPolicy) 1. CMC Markets. "[How To Trade With Fibonacci](https://www.cmcmarkets.com/en/trading-guides/how-to-trade-with-fibonacci)." 2. Britannica. "[Fibonacci Sequence](https://www.britannica.com/science/Fibonacci-number)." 3. StockCharts. "[Fibonacci Retracements](https://chartschool.stockcharts.com/table-of-contents/chart-analysis/chart-annotation-tools/fibonacci-retracements)." 4. CMC Markets. "[How To Trade With Fibonacci](https://www.cmcmarkets.com/en/trading-guides/how-to-trade-with-fibonacci)." Compare Accounts Advertiser Disclosure × The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Read more - [Trading](https://www.investopedia.com/trading-4427765) - [Technical Analysis](https://www.investopedia.com/technical-analysis-4689657) - [Technical Analysis Basic Education](https://www.investopedia.com/technical-analysis-basic-education-4689655) Partner Links Take the Next Step to Invest Advertiser Disclosure × The offers that appear in this table are from partnerships from which Investopedia receives compensation. 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Readable Markdown	Fibonacci retracements help technical traders predict potential market movements by identifying likely [support](https://www.investopedia.com/terms/s/support.asp) and [resistance](https://www.investopedia.com/terms/r/resistance.asp) levels on stock charts. Based on the historically significant Fibonacci sequence, ratios like 23.6%, 38.2%, 50%, and 61.8% are used to estimate how far prices may retrace before continuing a trend. Traders often use these levels to determine where to place stop-loss orders and set target prices to improve their trading strategies. [Fibonacci retracements](https://www.investopedia.com/terms/f/fibonacciretracement.asp) are commonly used with other technical indicators to confirm signals and guide decision-making. ### Key Takeaways - Fibonacci retracements help traders identify potential support and resistance levels by using key Fibonacci ratios. - These ratios, like 23.6%, 38.2%, and 61.8%, are derived from the Fibonacci sequence and are central to technical analysis. - Fibonacci retracements are widely used due to their simplicity and applicability across various trading instruments. - While popular, Fibonacci retracements should be used alongside other indicators for better accuracy. - The tool is subjective, and its efficacy may vary, with some traders finding it unreliable. Get personalized, AI-powered answers built on 27+ years of trusted expertise. ## Understanding Fibonacci Ratios in Trading Before we can understand why these ratios were chosen, let's review the Fibonacci number series. The [Fibonacci sequence](https://www.investopedia.com/articles/technical/04/033104.asp) of numbers is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. Each term in this sequence is simply the sum of the two preceding terms, and the sequence continues infinitely. One of the remarkable characteristics of this numerical sequence is that each number is approximately 1.618 times greater than the preceding number. This common relationship between every number in the series is the foundation of the ratios used by technical traders to determine [retracement](https://www.investopedia.com/terms/r/retracement.asp) levels. The key Fibonacci ratio of 61.8% is found by dividing one number in the series by the number that follows it. For example, 21 divided by 34 equals 0.6176, and 55 divided by 89 equals about 0.61798. The 38.2% ratio is discovered by dividing a number in the series by the number located two spots to the right. For instance, 55 divided by 144 equals approximately 0.38194. The 23.6% ratio is found by dividing one number in the series by the number that is three places to the right. For example, 8 divided by 34 equals about 0.23529. ## Using Fibonacci Retracement to Forecast Stock Price Movements For unknown reasons, these Fibonacci ratios seem to play a role in the stock market, just as they do in nature. Technical traders attempt to use them to determine critical points where an asset's price momentum is likely to reverse. [The best brokers for day traders](https://www.investopedia.com/the-best-brokers-for-day-trading-8762913) can further aid investors trying to predict stock prices via Fibonacci retracements. Fibonacci [retracements are the most widely used](https://www.investopedia.com/articles/active-trading/091114/strategies-trading-fibonacci-retracements.asp) of all the Fibonacci trading tools. That is partly because of their relative simplicity and partly due to their applicability to almost any trading instrument. They can be used to draw support lines, identify resistance levels, place [stop-loss orders](https://www.investopedia.com/terms/s/stop-lossorder.asp), and set target prices. Fibonacci ratios can even act as a primary mechanism in a [countertrend trading](https://www.investopedia.com/terms/c/countertrend.asp) strategy. Fibonacci retracement levels are horizontal lines that indicate the possible locations of support and resistance levels. Each level is associated with one of the above ratios or percentages. It shows how much of a prior move the price has retraced. The direction of the previous trend is likely to continue. However, the price of the asset usually retraces to one of the ratios listed above before that happens. The following chart illustrates how a Fibonacci retracement appears. Most modern trading platforms contain a tool that automatically draws in the horizontal lines. Notice how the price changes direction as it approaches the support and resistance levels. Image by Sabrina Jiang © Investopedia 2020 Aside from the mentioned ratios, many traders also use the 50% level. ### Important The 50% retracement level is not really a Fibonacci ratio. However, traders often use it because of the tendency of asset prices to continue in a particular direction after a 50% retracement. ## Pros and Cons of Fibonacci Retracement in Trading Although popular, Fibonacci retracements have conceptual and technical drawbacks traders should know. Using Fibonacci retracement is subjective. Traders use it differently; some find it effective, while others see it as unreliable. Others argue that technical analysis is a case of a [self-fulfilling prophecy](https://www.investopedia.com/ask/answers/05/selffulfillingprophecy.asp). If traders are all watching and using the same Fibonacci ratios or other technical indicators, the price action may reflect that fact. Fibonacci tools are based on a numerical anomaly without logical proof. The ratios, integers, sequences, and formulas derived from the Fibonacci sequence are only the product of a mathematical process. That does not make Fibonacci trading inherently unreliable. However, it can be uncomfortable for traders who want to understand the rationale behind a strategy. Additionally, Fibonacci retracement can only suggest possible [corrections](https://www.investopedia.com/terms/c/correction.asp), reversals, and countertrend bounces but struggles to confirm other indicators or provide clear signals. ### Pros and Cons of Fibonacci Retracement Pros - Fibonacci ratios provide a simple mathematical way to predict support and resistance - Many traders base their decisions on Fibonacci retracements, making their predictions self-fulfilling Cons - There is no logical reason why Fibonacci levels should provide more reliable resistance than other levels. - The system does not provide confirmations or strong or weak signals. ## Why Does the Fibonacci Retracement Work? It works because it allows traders to identify and place trades within powerful, long-term price trends by determining when an asset's price is likely to switch course. ## What Is the Time Interval In Trading Stocks for a Fibonacci Sequence? Fibonacci retracements can be used on a variety of timeframes. However, they are more effective on somewhat longer timeframes, such as a weekly chart vs. a 30-minute chart. ## How Do You Use a Fibonacci Retracement? A technical analyst looking for potential [support and resistance](https://www.investopedia.com/trading/support-and-resistance-basics/) levels will select two prominent points from a stock's chart, typically the highest and lowest points over a set period of time, and divide the vertical distance by key Fibonacci ratios. With the levels identified, horizontal lines are drawn, enabling market makers to identify trading opportunities. ## The Bottom Line Fibonacci retracements can help you identify important support and resistance levels in trading, using ratios derived from the mathematically significant Fibonacci sequence. While simple and can be broadly applied, they are limited, as they may not provide strong confirmations on their own. Many traders combine Fibonacci retracements with other technical tools and signals.
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