Retracement

From Reuters Financial Glossary

Percentage retracements of market price movements are used by technical analysts to determine price objectives. Markets usually retrace previous moves by predictable percentages such as 33, 50 and 67. The 33 and 67 percent retracements are the minimum and maximum retracements in Dow theory. The 50 percent retracement is the most important according to Gann. The Fibonacci number sequence refines these numbers to produce retracements of 61.8 percent and 38 percent and 50 percent.

See also: Analysis