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Why the 50% level works: hypotheses and examples

Let’s suppose that some factors made the price rise from 100 to 110 dollars, for example, it happened due to a release of positive reporting. This is an impulsive move.

The 50% retracement is a subsequent price decline to $105 from a $110 peak. That is half the impulse. A trend is likely to resume after the 50% retracement.

It usually works like this:

  • volumes decrease during a decline;
  • the price decreases more slowly during the retracement compared to the increase.

This phenomenon was discovered more than 100 years ago. No wonder that the 50% level of the impulse is described as a very important thing in numerous books on technical analysis for beginner traders.

My profession is a journalist, but my hobby for 8 years has been studying Forex investing and trading. During this time, I managed to gain extensive experience in investing and trading cryptocurrencies and double my capital in the Forex market. To be the author of this magazine, the site owners invited me to participate in one of the 2020 trading webinars, and I will try to reveal the most relevant crypto market news for you.

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