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Fibonacci Retracement
Technical Analysis
Fibonacci retracements are horizontal levels showing how much of a significant rise or fall price might give back.
The ratios used are 23.6%, 38.2%, 61.8% and 78.6%; 50% is not a Fibonacci ratio but is commonly added. There is no proven reason these ratios should affect markets. The levels are watched because many participants look at the same places, and they change depending on which high and low are chosen.
Example
If a stock rose from $100 to $200, a 38.2% retracement lands at 200 - 38.2 = $161.80, a 50% retracement at $150, and a 61.8% retracement at $138.20.