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Fibonacci retracement (the "golden pocket")

How much of a share’s move over the past year it has since given back — and the 61.8%-65% band that more chart-watchers draw than any other.

When a share runs from its 52-week low up to its 52-week high it has made a move, and when it falls back afterwards it gives some of that move away. The fraction it has given back is the retracement: give back nothing and it is 0%, fall all the way back to where the move began and it is 100%. Exactly the same idea runs the other way for a share that fell to its low first and has since bounced, where the retracement measures how much of the fall has been recovered. Which of the two applies is decided by which of the year’s two extremes happened more recently, and that matters — measuring a recovering share as though it were still falling would describe it backwards, and about a third of the companies stocks-llm covers are in that case at any time.

The band from 61.8% to 65% given back is what chart-watchers call the "golden pocket". The first number comes from the Fibonacci sequence, where each term divided by the next converges on 0.618; the second is the rounder figure the zone is usually drawn out to. It is worth being straightforward about this: there is no evidence that a number sequence governs share prices, and nothing on this site claims otherwise. The reason the band is worth knowing about is much more ordinary and entirely observable — it is one of a very small number of levels that a great many traders draw on the same chart, so orders tend to cluster around it. That is a fact about crowd behaviour, not about mathematics.

Three limits are worth stating. A price arriving at a widely-watched level is a description of where it currently is, not a prediction that it will stop there; plenty of shares pass straight through and keep going, and a company in real trouble retraces the whole move and then some. The level is worked out from delayed daily closing prices rather than from every tick, so it is genuinely a band and not an exact number, which is why we list companies a few points either side rather than pretending to a hard edge. And a retracement is silent about cause: a share giving back two thirds of a rise because the story has changed sits in the same list as one drifting back on no news at all. stocks-llm computes this nightly from split-adjusted daily closes, and declines to report it for a company whose price history does not yet cover a full year. Nothing here is advice.

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Related terms

  • Moving average (50-day & 200-day) — A moving average smooths a stock’s price by averaging its recent closing prices — the 50-day and 200-day are the most-watched trend lines.
  • Golden cross — A golden cross occurs when a stock’s 50-day moving average crosses above its 200-day moving average — a widely-watched long-term momentum shift.
  • Death cross — A death cross occurs when a stock’s 50-day moving average crosses below its 200-day moving average — the bearish counterpart of a golden cross.
  • RSI (Relative Strength Index) — The RSI is a 0–100 momentum oscillator that measures how fast a stock’s price has risen or fallen recently; readings below 30 are "oversold" and above 70 "overbought."
  • Overbought & oversold — "Overbought" and "oversold" describe a stock whose price has moved up or down unusually fast recently — most commonly measured with a 14-day RSI above 70 or below 30.

See more terms in the stocks-llm glossary.

Informational only — NOT financial advice. This is an educational definition, not a recommendation to buy or sell anything. Metrics on stocks-llm are delayed data and may be missing or stale. Always verify information independently and consult a qualified financial professional before making any investment decision.

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Informational only — NOT financial advice.

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