The Fibonacci sequence is the series of numbers in which each next number is formed by adding up the two previous numbers.
The Fibonacci levels are quite a popular technical tool among traders, it works best when the market is trending. The Fibonacci retracement levels show possible levels of price correction.
The Fibonacci levels calculation is based on the Fibonacci numbers. The key Fibonacci levels are considered to be 23.6%, 38.2%, 50%, 61.8%. The strongest levels are 50.0%, 61.8% and 78.6%.
Fibonacci Pivot Points are rather effective and used widely to build different trading methods on Forex.
You can find more information on Fibonacci in the official website of XM.