One of the ways to determinate end of corrections(potential reversal areas) is by using Fibonacci retracement levels in your analysis approach . In this blog, we’re going to explain some basic things about Fibonacci retracements.
Fibonacci retracement is a popular tool among Elliott Wave practitioners and is based on the key founded by mathematician Leonardo Fibonacci. The most important Fibonacci ratios are 23.6%, 38.2%, 50%, 61.8%, 76.4% and 100%.
Determination of right retracement area is based on several things like previous wave structure and market correlation.
In most cases regular corrections end at 50%-61.8% Fibonacci retracement area. Examples: Wave 2 of 5 wave structure, Wave X of double/ triple three, Wave B of Zig Zag.