Fibonacci retracements is a method of technical analysis for determining support and resistance levels. The support and resistance level are areas where the price of the financial instrument is expected to retreat or correct before returning to the previous trend.
Fibonacci retracements can be created by selecting a high and a low point in the chart. The low point is equal to the Fibonacci ratio of 0.0% while the higher point equals the Fibonacci ratio of 100%. The rest of the Fibonacci retracements levels can be draw by using horizontal line that will identify the areas of support and resistances between 0% and 100%.
These horizontal lines will have Fibonacci values such 23.6%, 38.2%, 50%, 61.8%, and 76.4%.
Most brokers trading platform have advance Fibonacci Retracements level in-build in their trading platform. Many brokers like AvaTrade have a wide range of Fibonacci Retrecements tools and they include Fibonacci Fan, Channel, Time Zone, Arc and Fibonacci Expansion tool.