The Fibonacci retracement tool is one of those tools in forex that a forex trader simply cannot do without. This is because in the financial markets, prices do not move in a continuous straight line, but in a convoluted twist of pullbacks and advances. Whenever the price action of a currency has moved substantially in a particular direction due to a very strong trend, those traders who were able to get in early would at some point, decide to take some profits from their trades. This will place the gaining currency on offer and will lead to a supply excess over demand for that currency at that particular time, leading to price pullbacks.