Stocks often retrace 38%, 50%, or 62% of the previous move before resuming the previous trend.
For stocks rallying, support often occurs at the 38%, 50%, or 62% retracement level before resuming the previous rally.
The Standard & Poor’s 500 index finding support at the 38%, the 50%, then the 62% retracement levels before resuming the uptrend. This example is more of an exception than the rule. Typically, a stock will find support at one of the levels, then resume the uptrend.
Motorola making a near perfect 50% retracement of the previous rally, setting up a low risk opportunity to buy.
For stocks declining, resistance often occurs at the 38%, 50%, or 62% retracement level before resuming the previous decline.
After the dramatic price drop from $115 to $60, Microsoft retraces 38% of the decline for a short sell opportunity
P ick your favorite stock you want to analyze. Then review the chart looking for retracements. You’ll surprise yourself with the numerous retracements you find.
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