We believe that the Fibonacci retracements are the underlying structure of all markets and in these weekly examples we give educational and actionable information.
As usual we will go back to show you where it has come from and what key levels they held first, then bring you up to date.
This week's example is The Walt Disney Company (DIS). We will start at the 3/18/20 low. The first attempt at a rally went right to 23.6% of the break at 96.90 (1), the break from there failed to make a new low. As always, once they have held either 23.6%, or 38.2% you should look for a new low, if the trend is going to continue, not doing so means the trend is possibly changing. The next rally took it to 38.2% of the break at 107.90 (2). The move down from there also failed to make a new low and when they took out 107.90, it tells us the low for the move should be in and to look for 61.8% back up (4) and that we should start watching the retracements below it. The break before they went to 61.8%, held 38.2% of the new move at 99.40 (3) reinforcing the idea that the trend has changed. The break from 61.8% (4) should have taken it back to 61.8% of where it just came from based on the "61.8% rule", but as always we will watch all of the retracements on any move. The break from 61.8% could only go back 38.2% at 108.40 (5) of the rally, again keeping the trend very positive. The rally from there went to 78.6% (A) of the ATH. The break from there fell short of 38.2% (B) of the move up (always a positive sign), but did hit 61.8% back to the 6/26/20 low. The move up to new all-time highs followed.
You have to retrace any new high back to the 3/18/20 low, if the market is going to remain very positive watch for 23.6% of that move to hold, but know that the trend has not changed until 38.2% of the move has been taken out. When a market gets extended like this one, you can use more direct lows to retrace to. In this case use the 10/29/20 low and use the same guidelines as just mentioned. As for what is above we use other ways of getting targets at ONE44 Analytics, but this is about retracements only, so continue to watch what levels they are holding and what that means based on our rules/guidelines here.