Support and resistance
Fibonacci retracements are used for predicting levels of support and resistance for a given market and are used immediately after a strong price movement either up or down. An imaginary vertical line is drawn across the chart between two extreme price values, one high and one low. Then a number of horizontal lines are drawn perpendicular to the imaginary vertical at significant Fibonacci values.
A Fibonacci retracement can help to predict levels of support and resistance within a large price reversal, allowing traders to anticipate medium-sized fluctuations in price and trade accordingly.