ONE44 Analytics where the analysis is concise and to the point
We believe the Fibonacci retracements are the underlying structure of all markets and in these updates our analysis will take you from educational to actionable
Starting with the all-time high on 2/20/20 the first setback two days later held 38.2% of the all-time high and low at 29.00. Based on the "38.2% rule" we know that in order to keep the current trend alive it must hold 38.2% and then go for new highs and a failure to make new highs, tells us the trend is possibly changing. The rally from 29.00 (1 day later) hit 61.8% back to the ATH. The break that followed from there took it right down to 61.8% of the all-time high and low at 20.50, on 2/27/20. The "61.8% rule" is, when holding 61.8% look for a move back to 61.8% of where they just came from.
As always regardless of what the target is, we watch all the retracements on that move.
The rally from 20.50 could only go 38.2% back to the ATH at 28.10 and new lows for the move followed, as it should based on the "38.2% rule". The next rally on 3/25/20 hit 18.25, this was 23.6% back to the ATH. This should have taken them to new lows based on our rules/guidelines. but held 61.8% of the move at 12.20. That failure to make new lows was a sign that a trend change is possible.
As we have mentioned in our previous updates, it is not unusual for the first market setback to go 61.8%, or even 78.6% when a trend change is happening. Once the trend is established it must hold 23.6% and more importantly 38.2% to keep it intact.
The next rally on 4/15/20 fell just short of 38.2% back to the ATH. The break from there went 38.2% of the current move on 5/1/20 at 15.60. The rally from there fell a few ticks shy of 38.2% to ATH once again on 5/8/20. The next low came on 6/15/20 just above 61.8%. The rally from this low took them just short of 61.8% back to the ATH at 28.00 on 7/23/20. Even though they missed the levels by 45 cents, the reaction from the area should still be the same as if it hit 61.8% and the "61.8% rule" tells us to look for 61.8% the other way. This was achieved on 9/4/20 at 15.48. The next rally went to 24.20 this was 78.6% back to the 7/23/20 high. The "78.6% rule" is the same as the 61.8% rule, in that any time it holds 78.6% the target is 78.6% the other way, they did this on 10/30/20 at 17.15.
The current high at 35.82 hit 78.6% back to the ATH and a break from here could send it 78.6% back to where it just came from and this would be 15.00. This will be the long term target. As always we will watch all of the retracements on the way down. Knowing that 38.2% is the most important level to the current trend. They need to hold 25.66 to keep the trend intact. They can trade below it, but the close is what matters (one close is acceptable). It can also hold above this level and the reaction from the area should be the same as if it hit 38.2% and that is new highs. A failure to hold 25.66 tells us there is a possible trend change and that would bring the long term target back into play.