Today, I wanted to review and expand on the Marketclub Video Adam Hewison produced: Dead for 750 years and still accurately predicting the markets…
For technical traders, the Fibonacci number sequence and the associated Fibonacci ratios have been turned into an amazing technical tool call Fibonacci Retracements. The Fibonacci ratios show up throughout nature, including in the patterns of flowers, and the ratio of lengths between various parts of the human body
(http://britton.disted.camosun.bc.ca/fibslide/jbfibslide.htm if you want to see some examples).
Well, as it turns out, the Fibonacci patterns also show up in the price patterns on stock charts.
Notice the Fibonacci retracement tool in this chart has been drawn from the lows in January of 2007, to the highs in late June 2008. You can see the current price has pulled back to the 38.2% level is is already rounding off. This price action is indicative of a normal correction, as supported by the rounding of the short period MACD. If the 38.2% level holds, this market would still be considered bullish. In fact, any retracement that falls shy of the 61.8% level is considered a normal correction. Once the 61.8% level has been taken out, a reversal is likely.
Marketclub has some great free videos on using Fibonacci retracements, as well as many trading examples. I have put some links to my favorite videos below!.
Videos: How To Use Fibonacci Retracements
- The Marketclub 50 Rule
- Fibonacci. it’s a technical tool that can make you rich
- Fibonacci Analysis of Commodities (Oil & Crude)
Fibonacci Retracement Trading Examples
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