Practice Session
If you’ve read this commentary for very long you already know I didn’t trade today. If there are no clear trades in the first hour and the range is small, I wait until it looks as though we are breaking out from the early range before trading. No potential breakout — no trade.
But whether trading or not, marking up charts with the potential Fibonacci turning points is good practice. In a narrow range the same patterns still appear, and the more screen time you can put in, the more of the setups you will catch in real time
However, when the market decides not to go anywhere it seems to like reversing at 78% and/or 89%. Maybe those larger pullbacks are just another way of showing a lack of direction.
Notice the nice Fibonacci cluster marked with the yellow “A.” The blue A-B-C turns at the 62% extension just as the smaller red A-B-C does the same. And that happens just as we retrace 89% of the morning drop. Add a nice Stochastic divergence and you have an excellent trade setup. Now all we need is some range.
