Fibonacci ratios often mark the end of moves, but the problem is seeing the possibilities in time to take action. Often a move will retrace more than 100 percent, and if so, the most likely turning points will be either 127% or 161.8% of a previous move. Or in today’s case, of a previous range.
Yesterday spent over five hours in a sideways pattern that was finally broken this morning. Where did the breakout fail. At exactly 27% above yesterday’s range (127% measuring from the bottom of the range.) It tried twice to break that level, reversing when the Consumer Confidence report was released. (No, I didn’t see this measurement in real time, but that’s why I study these charts every day after the market closes. Over time I catch more of them.)
I don’t tend to trade reports, but after the news pushed the market down there was a pullback entry (marked in yellow.) The trade was only slightly profitable, but look where it stopped. At 161.8% of the pullback. When it couldn’t push lower that was a good time to take at least partial profits.
Then the market waited for the Fed report which, as usual, caused prices to whip back and forth a bit before deciding to move higher. Once again there was a pullback entry if you were patient. No, I don’t see a Fib ratio there, but believe me, I looked. That’s the way to learn.
