Fibonacci Retracement

Price fluctuations don't follow rules. It was a challenge during the history of the market. Nobody knows what really going to happen but everyone tries their best to have good shot. Based on many traders' experiences, Fibonacci retracement has the most precise forecasting of the subsequent trend behavior. So it has become trendy among traders. Fibonacci retracement plays the best of all other Fibonacci tools in identifying possible levels at which the market retraces back. It is believed that after a sharp upward, a bearish trend may come and so on; after a bearish trend, an uptrend will happen. But how much does it fall lower or go higher? 

Fibonacci retracement has an answer to this question. It contains multi-levels, for each Fibonacci ratio (0,0.236,0.382,0.5,0.618,0.786,1) one line is presumed and all of them are in one tool on the price chart. Fibonacci retracement at any part of trend, evaluates the possibility of an increase or decrease in price. Almost always traders set 61.8% as an important ratio in which the price goes around that has a key sign. 
Although Fibonacci performs significant, accurate forecasting results in many time frames, there is no certain guarantee that price reacts to ratios definitely. 

Sometimes, Fibonacci retracement levels overlap with strong support or resistance level. As a rule of thumb, this coincidence of two main tools in the market, inform trader that price may decisively set foot on that level. Expanding this concurrently into channels, trendlines, indicators, and other technical analysis tools has a similar result.
Fibonacci retracement is also used to set stop-loss, place price targets, and identify static trendlines (support and resistance). Having pairs of them act powerful and lead to active strategy. In the following price chart, a practical example of drawing Fibonacci retracement is shown.