Fibonacci levels and sequences represent a widely used method in financial markets for analyzing asset price movements. Unlike mystical formulas or inherent market patterns, Fibonacci analysis is a tool based on mathematical principles. Its popularity stems from its widespread adoption among traders, akin to other common indicators.

Fibonacci levels encompass retracements and extensions. Retracement levels are applied following a new high in an uptrend or a new low in a downtrend, signaling a potential temporary halt in the trend. These levels, including 0.236, 0.382, 0.500, 0.618, and 0.764, are observed during market consolidations or corrections.

Conversely, extension levels are used to forecast the continuation of a trend. Market prices may correct to Fibonacci retracement levels before resuming their course in the direction of the prevailing trend or continue without retracing.

Similar to the Golden Ratio, there’s no universal law governing Fibonacci ratios. They are merely mathematical discoveries adopted by traders for their perceived significance.

Traders worldwide are intrigued by the predictive power attributed to Fibonacci ratios. Their global usage, including among professional traders, contributes to their effectiveness in market analysis.

Using a Fibonacci Levels Calculator involves simulating trend directions (uptrend or downtrend) and inputting lowest and highest asset prices to compute retracement levels. Results typically display retracement levels at key Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, and 78.6%). The calculator can also project extension levels by inputting an end price, providing up to six possible projection levels.