Retracement

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Retracement may mean:

• A share trading term expressed as a percentage of price movement from the most recent high in relation to the previous low. It can also be applied in reverse when 'short trading'. The degree of retracement is seen to be comparative to Fibonacci numbers which occur in nature and therefore, retracement is used to support statistical data in the Technical Analysis of share price movements. A share price will retrace in a cyclical pattern over time. The point at which a share price will start and finish its retracement is of particular interest to chartists and traders as this will indicate entry and exit points for a trade. These points can be identified by using other trading indicators such as MACD, Williams %R and Stochastic.

• To trace again or back, as in retraced their steps.

• In finance, a percent measure, indicating deviation of the current stock price from the maximum value. The price movement in the opposite direction of the previous trend. A zero retracement indicates a strong bullish movement.