The forex industry is made up of countless definitions and it's easy to forget a few along the way. But because no forex education can be complete without a glossary of forex terms, we've compiled one which aims at explaining key definitions in the simplest way possible. This way, you'll never be lost or confused again!
It is a technical analysis tool that is drawn between two major points - top and bottom. In an uptrend, it is drawn from bottom to top, displaying three lines at 38.2%, 50% and 61.8% (i.e. the vertical distance from top to bottom). The lines serve as potential support levels. In a downtrend it is drawn from top to bottom, displaying three lines at 0.382, 0.50 and 0.618 (i.e. the vertical distance from bottom to top). The lines serve as potential resistance levels.
Category: Technical Analysis