what are fibonacci retracement levels 
fibonacci retracement levels stemming from the fibonacci sequence are horizontal lines that indicate where support and resistance are likely to occur each level is associated with a percentage the percentage is how much of a prior move the price has retraced the fibonacci retracement levels are 23 6 38 2 61 8 and 78 6 while not officially a fibonacci ratio 50 is also used the indicator is useful because it can be drawn between any two significant price points such as a high and a low the indicator will then create the levels between those two points suppose the price of a stock rises 10 and then drops 2 36 in that case it has retraced 23 6 which is a fibonacci number fibonacci numbers are found throughout nature therefore many traders believe that these numbers also have relevance in financial markets fibonacci retracement levels were named after italian mathematician leonardo pisano bigollo who was famously known as leonardo fibonacci however fibonacci did not create the fibonacci sequence instead fibonacci introduced these numbers to western europe after learning about them from indian merchants some scholars suggest fibonacci retracement levels were formulated in ancient india between 700 bce and 100 ad while others estimate between 480 410 bce numbers first formulated in ancient indiadespite its name the fibonacci sequence was not developed by its namesake instead centuries before leonardo fibonacci shared it with western europe it was developed and used by indian mathematicians most notably indian mathematician acarya virahanka is known to have developed fibonacci numbers and the method of their sequencing around 600 800 a d following virahanka s discovery other subsequent generations of indian mathematicians gopala hemacandra and narayana pandita referenced the numbers and method pandita expanded its use by drawing a correlation between the fibonacci numbers and multinomial co efficients it is estimated that fibonacci numbers existed in indian society as early as 100 b c to 350 ad the formula for fibonacci retracement levelsfibonacci retracement levels do not have formulas when these indicators are applied to a chart the user chooses two points once those two points are chosen the lines are drawn at percentages of that move suppose the price rises from 10 to 15 and these two price levels are the points used to draw the retracement indicator then the 23 6 level will be at 13 82 15 5 0 236 13 82 the 50 level will be at 12 50 15 5 0 5 12 50 image by sabrina jiang investopedia 2021