How is the Fibonacci method used in the stock market?

Fibonacci retracement," is a technical analysis tool where traders identify potential support and resistance levels on a chart by dividing the price distance between two extreme points (like a swing high and low) using key Fibonacci ratios like 23.6%, 38.2%, 50%, and 61.8%, with the idea that prices may tend to bounce off these levels before continuing the trend in the original direction; essentially, it helps traders predict where a price might pause or reverse during a trend based on these calculated Fibonacci levels. read less