Fibonacci Retracement
Elliott Wave Theory glossary · Fibonacci Price & Time Projections
Definition
A price level calculated as a Fibonacci ratio of a prior impulse wave's range, used to estimate where a corrective wave will terminate.
Fibonacci Retracement in plain English
After a price rallies, it usually gives back part of that gain before continuing — and a Fibonacci Retracement predicts HOW MUCH it'll give back using famous ratios like 38.2%, 50%, and 61.8%. So if a stock climbed 100 points, traders watch levels like a 61-point pullback as likely spots where the dip stops and the trend resumes, the way a ball bouncing down stairs tends to settle at predictable steps rather than random ones. It's a tool for guessing where a temporary 'breather' in the market will end so you can be ready for the next move.
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