Technical Analysis
Fibonacci Retracement — Definition & Example
A tool drawing horizontal levels at 23.6%, 38.2%, 50%, 61.8%, and 78.6% of a prior move — common pullback zones.
Fibonacci retracements are drawn from a swing low to a swing high (or vice versa) and identify common pullback levels. The 38.2% and 61.8% levels are most heavily watched. These are not magical numbers — they work because enough traders watch them to create self-fulfilling reaction zones. Confluence with horizontal support/resistance is what makes Fib levels powerful.
Example
NIFTY rallied from 23500 to 24500 (1000-point move). The 50% retracement is 24000; 61.8% is 23882. A pullback to ~24000 that holds with bullish reversal candles often signals trend continuation.
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