📚 Stock Market Glossary

Clear, beginner-friendly explanations, real-world analogies, and visual formulas for key stock market terminology.

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Fibonacci Retracement

Trading & Market

💡 Key Takeaway: A technical analysis tool using horizontal lines based on Fibonacci ratios to identify potential support and resistance levels.

Rubber Band Analogy: Pulling a rubber band upward creates a proportional elastic Snapback before resuming its primary direction.

😎 10-Second Show-off Pro Tip for Friends!

😎 Show-off Tip: Say, 'During a strong bull rally, watch the 61.8% golden ratio retracement for high-probability pullback entries.'

STEP 1

Fibonacci Retracement maps mathematical golden ratios (23.6%, 38.2%, 50%, 61.8%) onto price charts to forecast key support and resistance zones.

STEP 2

Key Support Zones: The 38.2% and 61.8% retracement levels act as major institutional buying zones during pullbacks.
Self-Fulfilling Prophecy: Because millions of global algorithms and traders monitor these exact ratios, buying demand consolidates at these technical lines.

STEP 3

It is widely used to pinpoint entry points during healthy trend pullbacks.

📊 Fibonacci 61.8% retracement price calculation formula

Support price = Highest price - [(Highest price - Lowest price) × 0.618]

▶ A strong technical rebound target is formed at the point where 61.8% of the increase has been shaved off

Retracement Rate	Market sentiment	Trader trading response
38.2% retracement	Very strong upward trend in effect	Early additional purchase entry section
50.0% retracement	Standard and healthy pressed neck	The most balanced first split buy target
61.8% retracement (golden ratio)	Maginot line of trend change	Strong technical rebound support line

Tech stocks pulled back precisely to the 61.8% Fibonacci level before institutional buying ignited a violent rally.