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Fifty Percent Principle

Fifty Percent Principle Definition

A term used in technical analysis of stock price movement predicts that a price correction of approximately 1/2 to 2/3 of its previous move will occur before the observed trend continues. This method utilizes fibonacci levels. There are several fibonacci levels, the fifty percent retracement level is the best known. The correction is considered to be normal as it is a natural trading intuition to buy a stock when it retraces half, especially for day traders.

RELATED TERMS
Fibonacci Numbers
RELATED CATEGORIES
Technical Analysis




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