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33

The Sharp Retracement: 0.382

The .382 is mostly associated with a sharp pullback or retracement after a strong move. The .382 retracement occurs when the price action is extreme. The quick and sudden nature of the .382 pullback often leads to another extreme price move in that same direction.

Usually, a .382 retracement of a price move is followed by a 1.618 of that pullback. This means that if the .382 retracement is equal to 1, then the following price move should be at least 1.618. Sometimes, when the price action is very extreme the following price move can be 2.24, 2.618 or 3.14 of that retracement. The most important concept of the .3 82 is that it is associated with extreme price action.

bullish

the sharp retracement: .382

The following examples will illustrate the nature of the .382 retracement. It is important to notice the price action after the reversal off the .382 retracement, as it is usually quite strong.



scientific-atlanta (sfa): daily

bullish .382 a

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*S> Big.Ch3r"ts. oonm

J R S H D - - F M R M J



etoys (etys): daily bearish .382

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