Recycled Lines
Yesterday you saw how having two days of data available pointed out some pivots. Exactly the same thing happened today. And our good friend the 127% external Fibonacci retracement showed up again.
For those that just found this site, an external retracement is when a pullback extends beyond the starting pivot. Most people know about the 38%, 50%, and 62% pullbacks, but when price actually moves beyond the starting point, Fibonacci reversals still keep appearing. The first turning point past 100% is 127%.
The opening price gapped above yesterday’s resistance, and on the second three-minute bar we reached the 127% level. And when we shot back down through the resistance line it created a Spring reversal.
As will often happen we had a pullback to that same line. That would have made a much safer entry for a short sale by allowing a closer initial stop. The next reversal was at the trendline from yesterday’s data which was hit just as we retraced a Fibonacci 89%.
Many of you know I don’t like to trade between converging trendlines, but not everyone has that bias. In this case the bottom entry would have made a nice trade as it moved to the upper converging trendline just as it made another 127% external retracement. I can’t justify calling this a WEDGE pattern, since the volume doesn’t fit, so I guess it’s just wait for tomorrow.
