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FIBs

It's a chart overlay which shows support levels to any retracement in price. As each level is crossed it becomes resistance. And thus at the begining of retrace it shows 3 strong areas of support but as these levels are taken out it shows strong areas of resistance to any continuation.

My FIBs rule of thumb came from years of watching how price reacts during this process of retail mindset during retraces. It take into account retail will support a continuation bounce more before each level is broken and less as each level is crossed.

FIBs retracement Rule of Thumb.
If a retrace bonuce happens before 38% expect previous high to be taken out. If it happens at 50% expect previous high to be reached, If form 61% expect 38% and if from below 615 expect the first come back bounce to reach 50% FIBs.

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:fibonacci_retracemen