Trading What I See

Yesterday I didn’t mark an A-B-C for the downside triangle and its target because the previous day’s low seemed to form a strong support. So today the market started out by breaking that support and reversing right at a Fibonacci 162% extension for the A-B-C, and then gave a nice Spring setup.

The magenta “B” is a Fibonacci 78% retracement (not marked). Notice how it stalls at the level of the yellow “B” from yesterday. A nice combination of both price and Fibonacci resistance.

We ended the day at a Fibonacci cluster from two time frames. The larger magenta A-B-C is a 100% extension, while the smaller yellow A-B-C is a 162% extension. In addition, that level is the target for two external Fibonacci retracements. It is a 262% retracement of this morning’s move to magenta “B”, and a 127% external retracement of the second rally to yellow “X.”

Just because we have a nice Fibonacci cluster here, don’t assume this is the bottom. We are still inside a Daily rectangle, and have a way to go before testing the bottom support.

Even better, don’t assume anything. Look for setups that make sense to you and let the market gurus make their predictions. Taking good looking setups in either direction is what makes money in the market.