How do I place Fibonacci retracements

To place Fibonacci retracement levels, follow these steps:

1. **Identify the Trend**: Look for a trend in the market. This could be an uptrend or a downtrend.
2. **Determine Significant Price Points**: Identify the significant high points (peaks) and low points (troughs) during the trend. These will be the key points for drawing the Fibonacci retracement levels.
3. **Choose Your Tool**: Use a charting tool or platform that offers Fibonacci retracement levels. Many trading platforms have this feature built-in.
4. **Draw the Retracement Levels**: Take the two most significant price points (high and low or low and high) and drag the cursor to create the Fibonacci retracement levels. The key ratios to use are 23.6%, 38.2%, 50%, 61.8%, and 76.4%. The 50% level is not a true Fibonacci ratio but is often used.
5. **Interpret the Levels**: Expect the price to potentially reverse at these levels, especially during a trend. Traders often look for these levels as potential entry or exit points.
6. **Monitor Price Action**: Watch as the price moves closer to these levels. If it bounces off a Fibonacci level, it may indicate a potential trend reversal. If the price moves through a level without significant reaction, it may be less significant.

By following these steps, you can effectively place Fibonacci retracement levels to help inform your trading decisions.