What are fibonacci retracements?

Fibonacci retracements are like steps on a staircase that help people see where something might pause or turn before going further.

Imagine you're playing a game where you throw a ball up in the air, and it goes really high, that's like a big move upward. But when the ball comes back down, it doesn't just drop all the way to the ground right away. It bounces a little bit, that’s like a retracement, or a small step back.

Fibonacci retracements use special numbers (like 38%, 50%, and 62%) to guess where the ball might pause before it goes up again. These numbers come from a pattern discovered by an ancient mathematician named Fibonacci, but you don’t need to know that part to understand how they work.

Think of climbing a slide at the park. You go up all the way, then you slide back down a little bit before trying again. The points where you stop sliding are similar to Fibonacci retracement levels, they help people know when something might change direction after going up or down.