Fibonacci retracement
Price levels drawn at fixed fractions (such as 38.2%, 50% and 61.8%) of a previous move, where traders expect the price to pause or turn.
In plain English
Take a move from a low to a high, then mark the points 23.6%, 38.2%, 50%, 61.8% and 78.6% of the way back down. Traders treat those lines as likely places for a pullback to stop. The ratios come from the Fibonacci sequence, which is why they sound scientific; whether prices respect them is a question for data, not for the sequence.
Uncle Gary explains
Uncle Gary draws Fibonacci levels on every chart and says the price has 'nowhere to go' where three of them meet. In our test on about 580 stocks, those zones held no more often than a naive guess.
Why it matters for your money
Any line on a chart gets touched sometimes. The fair test is whether the level does better than a line drawn at a random nearby price. In our data, it didn't.
Where we tested it
Related terms
All glossary terms. Educational content, not financial advice.