Fibonacci retracements are often used to describe the end of a correction or a counter trend bounce. Corrections and countertrend jumps usually undo some of the previous move. The short 23.6% retracement occurs, while the 38.2-61.8% zone covers the most probability (50% middle). This zone may look large, but it's just a reverse alarm zone. Other technical signals are needed to confirm the reversal. Reversals can be confirmed by candlesticks, momentum indicators, volume or chart patterns.
Warning Zones
The retracement levels alert traders or investors to a potential trend reversal, resistance area or support area. Retractions are based on previous movement. A reversal is expected to retract some of the previous drop, while a correction is expected to retract part of the previous advance. Once a retracement begins, graphists can set specific Fibonacci retracement levels for tracking. As the correction approaches these retractions, graphists should be more alert for a potential bullish reversal. Chart 1 shows that Home Depot withdrew about 50% of its previous advance.
The opposite is true for a jump or corrective progress after a fall. As a leap begins, graphic artists can set specific Fibonacci retracement levels for tracking. As the correction approaches these retreats, mappers should be more alert for a potential bearish reversal. Chart 2 shows that 3M (MMM) retraced about 50% of its previous decline.
Keep in mind that these retracement levels are not difficult return points. Instead, they serve as warning zones for a potential reversal. At this point, traders should use other aspects of technical analysis to identify or confirm a reversal. These can include candlesticks, price patterns, momentum oscillators or moving averages.
Common Fixes
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The Fibonacci Correction Tool in StockCharts shows four common retracements: 23.6%, 38.2%, 50% and 61.8%. From the Fibonacci section above, it is clear that 23.6%, 38.2% and 61.8% are due to the ratios found in the Fibonacci sequence. The 50% retracement is not based on a Fibonacci number. Instead, this number is due to the Dow Theory claiming that the Averages usually retract half their previous moves.
Depending on the depth, we can consider a retraction of 23.6% relatively shallow. Such retreats will be suitable for flags or short retracts. Withdrawals in the range of 38.2% to 50% are considered moderate. Though deeper, the 61.8% retracement can be called the gold retracement. After all, it's based on the Golden Ratio.
Shallow retreats do occur, but a closer tracking and a faster trigger finger are required to catch them. The examples below use daily charts for 3-9 months. The focus will be on moderate retreats (38.2-50%) and gold retreats (61.8%). Additionally, these examples will show how retractions can be combined with other indicators to confirm a reversal.
 
Intermediate Retracements
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Grafik 3, önceki avansın% 38'ini geri çeken bir düzeltme ile Hedefi (TGT) göstermektedir. Bu düşüş aynı zamanda düzeltici hareketler için tipik olan düşen bir kama oluşturdu. Kombinasyon, ters çevirme uyarısını yükseltti. Chaikin Para Akışı, Haziran ayı sonlarında hisse senedi yükseldiğinde pozitif çıktı, ancak bu ilk ters çevirme girişimi başarısız oldu. Evet, başarısızlıklar olacak. Temmuz ortasındaki ikinci tersine çevirme başarılı oldu. TGT'nin boşluk bıraktığına, kama trend çizgisini kırdığına ve Chaikin Money Flow'un pozitif (yeşil çizgi) döndüğüne dikkat edin.
Grafik 4, Petsmart'ı (PETM) ılımlı bir% 38 geri çekilme ve bir araya gelen diğer sinyallerle göstermektedir. Eylül-Ekim aylarında düşüşün ardından hisse senedi, Kasım ayında yaklaşık 28'e geri döndü. % 38 geri çekilmeye ek olarak, bu alanda kırılan desteğin dirence dönüştüğüne dikkat edin. Kombinasyon, olası bir tersine çevirme için bir uyarı görevi gördü. Williams% R -% 20'nin üzerinde işlem görüyordu ve aşırı alım da yaptı. Sonraki sinyaller, tersine çevirmeyi onayladı. İlk olarak, Williams% R -% 20'nin altına geri döndü. İkincisi, PETM yükselen bir bayrak oluşturdu ve Aralık ayının ikinci haftasında keskin bir düşüşle bayrak desteğini kırdı.
Golden Retracements
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Chart 4 shows the Pfizer (PFE) bottom close to the 62% retracement level. Before this successful comeback, there was an unsuccessful bounce around a 50% retracement. Successful reversal took place with a high volume hammer and continued with a break a few days later.
Chart 5 shows JP Morgan (JPM) is near the 62% retracement level. The increase in the 62% retracement was quite strong, but resistance emerged suddenly with a reversal confirmation from the MACD (5.35.5). The red candlestick and the downward gap confirmed resistance around the 62% retracement. There was a two-day turnaround above 44.5, but this bounce quickly failed as the MACD crossed below the signal line (red dotted line).

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