Today we had more A-B-C patterns, but instead of marking them on the chart I’ve drawn in the pullbacks that made up the “B” sections. Often pullbacks will repeat the size of the previous retracement, giving you a price level to watch for an entry. Since these reversal points will usually be Fibonacci levels, checking the actual points moved can act as a type of confirmation.

Symetrical Pullbacks
We began with a gap to the 127% external retracement of yesterday’s afternoon decline. That level is often a reversal point as we’ve seen many times recently. Then we followed a stair-step pattern all the way to today’s low.

Each of the pullbacks retraced the same amount, and in doing so they set up a parallel trend channel that held until the last hour of trading.

You can’t tell how long this type of movement will continue, but if you look carefully at the volume bars, each pullback came on decreasing volume until we reached the last bottom. The increase in volume as we bounced from yesterday’s low was a good indication that the step-wise pattern had probably ended.

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