Fibonacci Arcs are used to help identify potential areas of Support and Resistance on the chart.
A line is drawn between an extreme low and an extreme high. The Fibonacci Arc tool then plots 3 arcs fanning out from the second extreme point, the arcs corresponding to the 38.2%, 50% and 61.8% Fibonacci percentage levels. Areas of Support and Resistance are seen to develop as the price approaches the arcs.
For example, see pound-dollar daily candlestick chart from March 2013 to October 2013. Joined March low and June high and we can see that taken strong support at 50% and 61.8% twice and from 61.8% levels, we saw strong rallies twice in row.