What are the key Fibonacci retracement levels?

    Quick Answer

    The key Fibonacci retracement levels are 23.6%, 38.2%, 50%, 61.8%, and 78.6%, derived from the Fibonacci sequence.

    Detailed Explanation

    Fibonacci retracement levels are horizontal lines indicating potential support and resistance levels based on the Fibonacci sequence. The key levels are 23.6%, 38.2%, 50%, 61.8% (the golden ratio), and 78.6%. These levels represent the percentage of a prior move that price may retrace before continuing in the original direction. The 61.8% level, known as the golden ratio, is considered the most significant.

    Key Points

    • 123.6% - Shallow retracement, strong trends
    • 238.2% - Common bounce level in healthy trends
    • 350% - Not a true Fib number but psychologically important
    • 461.8% - The golden ratio, most significant level
    • 578.6% - Deep retracement, last line of defense

    Example

    If a stock rises from $100 to $200, the 61.8% retracement level would be at $138.20 ($200 - ($100 × 0.618) = $138.20).

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