Retracement
Percentage retracements of market price movements are used by technical analysts to determine price objectives. Technical analysts believe that markets often retrace previous moves by predictable percentages such as 33, 50 and 67 percent. The 33 and 67 percent retracements are the minimum and maximum retracements in Dow Theory. A 50 percent retracement is the most important according to Gann. The sequence of Fibonacci Numbers produces retracements of 61.8 percent and 38 percent and 50 percent.
See also: Technical Analysis, Correction