🔢 How Fibonacci Retracement Works

• Concept: Based on the Fibonacci sequence, where ratios like 61.8% (the &ldquo golden ratio&rdquo ) are believed to reflect natural patterns in markets.
• Application: Drawn between a significant high and low on a chart to map retracement levels.
• Key Levels:
  • 23.6% &rarr Shallow pullback, often in strong trends.
  • 38.2% & 50% &rarr Moderate corrections, common retracement zones.
  • 61.8% &rarr Deep retracement, often a critical decision point.
  • 78.6% &rarr Very deep correction, last line before full reversal.

📊 Example

• 23.6% retracement &rarr RM17.64
• 38.2% retracement &rarr RM16.18
• 50% retracement &rarr RM15.00
• 61.8% retracement &rarr RM13.82
  These levels suggest where price might find support if it pulls back from RM20.

✅ Strengths

• Fixed levels: Unlike moving averages, Fibonacci levels don&rsquo t shift, making them useful for planning trades ahead.
• Widely used: Many traders watch these levels, creating self-fulfilling support/resistance zones.
• Versatile: Can be applied across stocks, forex, commodities, and indices.

⚠ ️ Limitations

• Not standalone: By itself, Fibonacci retracement is unreliable&mdash best combined with candlestick patterns, trendlines, or volume analysis.
• Subjective: Different traders may choose different swing highs/lows, leading to varied retracement maps.
• False signals: Price may break through levels, so risk management is essential.

🎯 Takeaway for You, Mark