Fibonacci Retracements with Barry Norman

When the price trends in any direction, the beginning and the end of that trend can be clearly identified. Using the Fibonacci tool, you measure the distance of that move and the Fibonacci tool will automatically place what is called Fibonacci retracement levels. Fibonacci levels are shown as percentages of that total move. So the level that has been placed half way between the start and the end of the move is the 50% retracement level. So if the price then retraced halfway back, it is said to have retraced to the 50% level. This then acts as support or resistance, depending on which way the trend is. The 38.2%, 50% and 61.8% levels are the most commonly used levels that the price could retrace back to. The retracement levels therefore tell us how far the pull back could be.