The Fibonacci retracement method refers to the use of a set of numbers known as Fibonacci ratios, which are often used for identifying the support and resistance for various assets, stocks, and cryptocurrencies.
The Fibonacci retracement method was developed in 1170 AD by the famous mathematician Leonardo Fibonacci. The Fibonacci retracement levels are the set of key numbers that represents the two extreme points for the ratio. 23.6%, 38.2%, 50%, 61.8%, and 78.6% are the most prominent examples of such ratios.
In order to represent the support and resistance levels, horizontal lines are drawn for Fibonacci retracement levels. It is one of the best ways to study the price reversal, and how much it has deviated from the previous movement. Although the biggest downside of using Fibonacci retracement is its objective nature.