Trading What I See

Some days when I’m not trading, I still can’t stop watching the market. Today was one of those days. Although yesterday didn’t have the range of a “real” trend day, a consolidation wasn’t surprising. Of course I had anticipated a reversal, but as you know, I trade what I see, not what I expect.

We made a sudden drop from the open, and although it reversed at a 78% retracement of yesterday’s last rally, I didn’t see a good entry. Then we broke out to a new high, but reversed back down. As I’ve mentioned before, under these conditions I will often set an alarm at the first hour’s high and low and work on other projects.

When I checked back later, what I saw was a series of reversals at nice Fibonacci retracements, but little range. Back to work. My next check revealed even more levels hit, and I just had to watch how long this Fibonacci Ping Pong could keep up.

Several times I though it had broken the pattern, but in each case it was a false reversal. Let’s start with the blue tops. Each blue arrow marks a pullback to a retracement of the day’s high - each at a standard Fibonacci level. Every level used measures from the lowest low so far in the decline. There is only one pivot without a direct hit. [Noticed after the post - the third blue Fib number should be 32%.]

The green lows, retracements of the low to high range, are even better. I didn’t mark it because the chart was getting too hard to read, but the first tiny reversal came when price hit the blue moving average — at exactly 38%. Then we ticked off the Fib number in sequence: 50%, 62%, 78%, and 89% — a catalog of the important Fibonacci numbers.

Since we then reversed back up, the yellow arrows are pullbacks to the 9:45 low, but if you checked you would find they also relate to the earlier low of the day. There were more Fib ratios in some of the moves, but just using the standard retracements that many traders follow was enough. Trading or not, a true Fibonacci Festival.