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General TradingG
Golden Ratio
The golden ratio (approximately 1.618) is a mathematical proportion found in nature and widely applied in technical analysis. Traders use it through Fibonacci retracement and extension levels, where key ratios like 61.8% and 161.8% are derived from the golden ratio to identify potential support, resistance, and price targets.
Example
“The trader placed a profit target at the 161.8% Fibonacci extension, a level derived from the golden ratio, which price reached before reversing sharply.”