Choose and disclose the anchors
Fibonacci retracement tools mark proportions of a selected price move between two anchors. Commonly watched levels include 38.2% and 61.8%; many chart packages also show 50%, which is not itself a Fibonacci ratio. Different choices of high, low and timeframe create different levels. Record the anchors before evaluating the chart so that the method does not quietly change to fit an observed outcome.
Treat levels as hypotheses
A retracement level can organize a question about possible support or resistance, but it does not create a barrier price must respect. A market can pass through several levels without reversing. Consider how the reference aligns with observed trading activity, prior price structure and current events. A cluster of overlapping chart lines may look persuasive while adding little independent evidence about the next move.
Evaluate without hindsight
Write a rule for when the setup becomes valid, where it fails and how execution would occur. Include cases where the market never reaches the selected level or continues beyond it. Test costs and alternative anchor choices to reveal sensitivity. FYLU's explanation is a framework for studying chart references; it does not establish a profitable retracement strategy or recommend trading at a specific percentage.