What is the 0.618 Fibonacci retracement level?

The 0.618 Fibonacci retracement level tends to act as a capitulation price level where anyone who was going to stop-out of a position has been stopped out or has given up. This is what makes the 0.618 Fibonacci retracement level a prime entry point. The 0.382 is the nominal pullback level to consider on pullbacks.

What is a Fibonacci retracement?

Fibonacci retracements are popular tools that traders can use to draw support lines, identify resistance levels, place stop-loss orders, and set target prices. A Fibonacci retracement is created by taking two extreme points on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8%, and 100%.

Are Fibonacci retracement levels static?

Fibonacci retracement levels are static, unlike moving averages. The static nature of the price levels allows for quick and easy identification. That helps traders and investors to anticipate and react prudently when the price levels are tested.