There was a nice Fibonacci Cluster at this morning’s bottom using a 15 minute chart that shows the entire week’s trading. Unfortunately the setup was heading back into the congestion of the last two days, so I wasn’t willing to take it. But it’s still a great example of the type of trade that can occur when a number of signals hit at the same time.
The first setup (in yellow) is an A-B-C pattern that took two days to build. The measurement from Wednesday’s top to point “A” is duplicated by the move from “B” to “C.” This is often called a Measured Move (100%) and is quite tradable by itself.
The second Fibonacci setup (blue) occurs when the movement from “A” to “B” is retraced by 127%. This is where the market will often turn. First it breaks support triggering a number of stops, and then it reverses.
Point “C” also created a Wyckoff Spring, since point “A” marked the level of the lows for the last two days. A Spring is where an important support level is broken and the market, instead of continuing, reverses back through that level.
The final factor was the Fibonacci retracement from Monday’s low (magenta) making a nice 62% pullback. Four reasons for a bottom, and the rest of the day made a steady climb to the close.
