The 'Retracement Curse' of Adjustment Waves - The Mysterious Power of Fibonacci

Retracement Curse

Have you noticed that whenever the market fluctuates, there's always some "retracement curse" at play? That's right, a corrective wave always retraces a certain Fibonacci percentage of the previous wave—just like retreating to base to replenish supplies after a tough battle.

Most of the time, steep corrective waves retrace 61.8% or 50% of the previous wave, as if the market is whispering to itself, "Take half a break, or maybe a little more!" Especially when these corrections appear in Wave 2 of an impulse wave, Wave B of a larger zigzag correction, or Wave X of a multiple zigzag correction, their retracement behavior makes it seem like the market is following a script!

The "Deep Retracement" of Leading Diagonal Waves

What’s most fascinating is the leading diagonal in Wave 1, often followed by a "deep retracement" of 78.6%. It’s as if the market is exhausted and has to "take three steps back" for a thorough adjustment before moving forward again.

But Don’t Be Fooled by the "Numbers"!

Of course, Fibonacci ratios are just a market tendency—like people’s habit of drinking tea after lunch—not every retracement will be perfect. Unfortunately, many analysts are too fixated on these numbers, believing the simpler the retracement measurement, the better. The result? We often see them obsessing over Fibonacci’s golden numbers as if they hold the entire "truth" of the market, while missing many opportunities.

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