Fibonacci retracement is useful when a market has moved in a clear trend and then starts correcting. Traders select a valid swing high and swing low and plot levels such as 38.2%, 50% and 61.8% to identify possible reaction zones.

A common mistake is treating Fibonacci as magic. These levels become more useful when they overlap with support/resistance, market structure, confirmation candles, volume or tools such as Ichimoku.

At Nexito, Fibonacci is a scenario tool: if price reacts around an important Fibonacci zone with confirmation, the area deserves attention. But without risk management, no level is enough.