Fibonacci retracement is a technical analysis tool that plots horizontal lines at set percentages of a prior move — typically 23.6%, 38.2%, 50% (technically not a true Fib ratio but widely used), 61.8%, and 78.6%. Traders use these levels to anticipate where a pullback might stall and the underlying trend resume.
The 61.8% level is the classic "golden ratio" bounce zone and is watched by most discretionary traders. Fib levels do not cause price to reverse by themselves — they work because enough traders act on them, which concentrates orders around those prices. Pair Fib levels with confluence (S/R, moving averages) rather than using them in isolation.