Jo Xappie
Not sure about the algorithm but .380, .50 and .786 retracements are high probability areas for support and resistance. To follow that, 1.380, 1.50 and 1.786 are high probability extensions once it takes off again.
I would think there's more to the algorithm than just Fib numbers but these levels are naturally occurring over and over in nature. Just look at the number of rabbits Fibonacci had to breed to figure out the sequence...LOL