Fibonacci (retracements)
Retracement levels (for example 38.2%, 50%, 61.8%) used as potential reaction zones within a trend — a context tool, not an oracle.
Definition
Fibonacci retracements are percentage levels measured from an impulse (for example 38.2%, 50%, 61.8%), treated as possible pullback zones within a trend. They are a context tool for planning entries and invalidation — not a law of the market and not a guarantee that price will bounce.
Example
EUR/USD rises from 1.0800 to 1.1000. You draw the retracement from the low to the high: the area around 1.0876 (61.8%) may be a zone where you look for long continuation with a clear stop below the structure — but only if the trend and the context support it.
Anti-example / common mistake
Treating “exactly 61.8%” as a magic line without an HH/HL structure and without an exit plan. Another mistake: drawing Fibonacci from random swings on every timeframe at once, until the chart looks like a spider web.