#CurrencyPairPrediction Fibonacci Retracement and Extension are tools used in technical analysis to identify potential support and resistance levels, as well as price targets, based on Fibonacci ratios. These ratios (23.6%, 38.2%, 50%, 61.8%, and 78.6% for retracement levels, and 161.8%, 261.8%, and 423.6% for extension levels) are derived from the Fibonacci sequence, a series of numbers where each number is the sum of the two preceding ones (e.g., 1, 1, 2, 3, 5, 8, 13...). To apply Fibonacci retracement levels, a trader identifies a significant high and low point on a price chart. Horizontal lines are then drawn at the Fibonacci percentages of that price range. These lines are thought to represent potential areas where the price might retrace or find support or resistance after a significant move. The 61.8% level, often referred to as the "golden ratio," is particularly watched by traders. Fibonacci extension levels are used to project potential price targets after a retracement has occurred. They are drawn beyond the initial high or low point based on the Fibonacci ratios applied to the size of the initial price swing. Traders often look for price to extend towards these levels after breaking through a retracement level. It's important to note that Fibonacci levels are not absolute guarantees of price action but rather areas of potential interest where buying or selling pressure might increase. They are often used in conjunction with other technical analysis tools and indicators to confirm potential trade setups.