I thought I would provide a brief example on how using the Fibonacci levels in a particular up or down move can help in determining where price may attract to. My recent example is GMCR (Green Mountain Coffee Roasters) and here is the Weekly chart:
The waterfall down move after David Einhorn announced that he was short the stock only began to abate as it hit near the 56 level. It then bounced – and as noted on the chart above – it retraced 50% of that down move. It found Resistance at that point and has pulled back to the 71 level, closing just above the 38.2% Fib level.
This is just one tool to use to help improve the timing of entry or exit. Trade ‘em well.