Fibonacci Retracement

Fibonacci retracement is a technical analysis tool that uses horizontal lines to identify potential support or resistance levels at key percentage levels derived from the Fibonacci mathematical sequence — specifically 23.6%, 38.2%, 50%, 61.8%, and 78.6% of a prior price move. These levels are drawn by identifying a significant price swing (from trough to peak for an uptrend, or peak to trough for a downtrend) and calculating the retracement percentages within that range. The 61.8% level — known as the golden ratio — is considered the most significant, as it frequently acts as a major support or resistance zone. In Indian equity markets, Fibonacci retracement levels are widely used by technical traders to identify optimal entry points during pullbacks within established uptrends in Nifty 50, Bank Nifty, and large-cap stocks. For example, in a Nifty rally from 20,000 to 24,000, the 61.8% retracement level at approximately 21,528 would be watched as a potential buying zone if the index corrects.