Fibonacci retracement levels connect any two points that the trader views as relevant, typically a high point and a low point. The percentage levels provided are areas where the price could stall or reverse. The most commonly used ratios include 23.6%, 38.2%, 50%, 61.8%, and 78.6%.
The essential part is that as the numbers get larger, the quotient between each successive pair of Fibonacci numbers approximates 1.618, or its inverse 0.618. This proportion is known by many names: the golden ratio, the golden mean, , and the divine proportion, among others. So, why is this number so important?