Fibonacci analysis uses ratios from the Fibonacci sequence to identify potential support and resistance levels in currency pairs. There are three main Fibonacci tools: 1) Retracements identify support/resistance levels (61.8%, 50%, 38.2%, etc.) when a trend reverses. 2) Projections estimate how far a trend may continue based on ratios from the sequence. 3) Fans draw diagonal support/resistance lines based on retracement levels to identify potential price action. These tools help traders identify entry and exit points for trades.