Retracement measures the percentage increase or decrease a stock moves in the same direction after hitting a new high or low. For example, if a stock moves from a high of $100 to a low of $50 — a 50-point drop — then it hits $75 — a 25-point move from $50 — the move from $50 to $75 (25 points), even though it’s gone higher, actually retraced 50% of the original 50-point drop from $100 to $50.
We have identified this type of technical formation in the Russell 2000 ETF, IWM.
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