This article has been translated from English to Gen Z Slang.
Let’s spill the tea on Fibonacci retracement levels, fam.
Fibonacci retracement levels are basic lines that might tell you where things could flip out in the market—like a support or a resistance vibe.
First off, the Fibonacci tool is a whole vibe when the market's on a trendy streak.
The play here is to go on a shopping spree (a.k.a. buy) at a Fibonacci support level when the market is UP, riding the hype train.
And to dump stuff (a.k.a. sell) at a Fibonacci resistance level when the market’s tanking DOWN.
Fibonacci retracement levels are like those future psychic TikToks—they try to guess where the price is headed next.
The whole vibe is, once the price finds a new direction, it’ll slide back to a previous spot before getting back on track.Lil’ Guide: Finding Fibonacci Retracement Levels
To vibe with these Fibonacci retracement levels, you gotta track those solid Swing Highs and Swing Lows that have been making moves recently.
So, if the market’s looking bearish, click that Swing High and slide over to the juiciest Swing Low.
Feeling bullish? Flip it! Click the Swing Low and drag over to that dope Swing High.
Get it?Now, let’s peep some dope examples of applying Fibonacci retracement levels in the currency hustle.
Uptrend Glow-Up
This chart's serving DAILY realness of AUD/USD.
We plotted the Fibonacci retracement by clicking that Swing Low of .6955 on April 20, then dragged it up to the Swing High of .8264 on June 3.
Voila! The charting app just wizard-ed up and showed you those retracement levels like pure magic.
The chart shows Fibonacci retracement levels at .7955 (23.6%), .7764 (38.2%), .7609 (50.0%*), .7454 (61.8%), and .7263 (76.4%).
The vibe check says that if AUD/USD rolls back from the club (or the recent high), it'll crash somewhere at these Fibonacci retracement levels because traders will slide buy orders there as it chills back.
*The 50.0% isn't here officially but somehow got the invite and hasn't left the party.
Check what went down after the market hit that Swing High.
Price slipped past the 23.6% level and zoomed down over the next few weeks.
It even tested the 38.2% mark but couldn’t lock it in.Later, around July 14, the market pulled a reverse UNO and broke the swing high.
Clearly, popping at that 38.2% Fib level would've been the Renaissance move for traders!
Downtrend Dig
Next, peep how we roll with Fibonacci in a downtrend. Here’s a 4-hour chart of EUR/USD.
See, our Swing High flexed at 1.4195 on Jan 25, and we found the Swing Low flipping at 1.3854 on Feb 1.
The retracement levels are 1.3933 (23.6%), 1.3983 (38.2%), 1.4023 (50.0%), 1.4064 (61.8%) and 1.4114 (76.4%).
When price slides up from the low, there could be a pause at these levels ‘cause traders who love the downtrend got sell orders ready there.
Here’s what went down next.
Whoa! Isn’t that pure drip?
The market almost popped, but got stuck below the 38.2% for a while before showing some respect to the 50.0% level.
If you had orders at either 38.2% or 50.0%, you’d be rolling in pips!In these two cases, we saw the price chillin' at these Fibonacci retracement levels, giving off those temporary support or resistance vibes.
With all the peeps showing love to the Fibonacci tool, those levels turn into these dope, self-fulfilling support and resistance hypes.
If enough finance bros think the market's gonna retrace at those Fibonacci levels, and have orders lined up, y’all know it might stir the market juice.
A heads up tho—prices ain't always shaking from these levels. Keep them in mind as interest zones.
Low-key, remember this when using Fibonacci stuff, they ain't your easy-breezy fix!
If it were a cakewalk, everyone would just be vibing at Fibonacci levels, and forever trending markets would be a thing.
Stay tuned—next up, what pops off when the Fibonacci retracement levels yeet out!