ONE44 Fibonacci Chart of the Week
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.
We will start with the years low on 3/18/20. The first rally from there took out 38.2% (1) back to the ATH at that time. Following the 38.2% rule, it meant that the low should be in and a new trend is starting. The setback after taking out (1) went 61.8% (2) back to the years low, It is not uncommon to retrace 61.8%, or 78.6% when a new trend is starting, but once the new trend is intact, it has to hold either 23.6% to be extremely positive, or 38.2% to keep the trend intact. This was accomplished when the market retraced 23.6% (3) on 4/21/20, this led to new highs for the move as it should. The next setback held 23.6% (4) on 5/14/20 and again led to new highs. Then again it hit 23.6% (5) on 7/16/20 keeping the trend very positive and new highs.
This now brings us to the actionable part,
The recent low on 12/2/20 has spent 8 days trading above two major retracements, 220.00 is 38.2% back to the years low and 218.00 is 23.6% back to the ATL. This is the long term swing point and the area to get long, because these retracements are 23.6% and 38.2% the long term target should be a new ATH. Just remember, that even though that is the target you still have to watch all the retracements back up and if it can only get to 38.2% back to the ATH, it would be a negative sign. It can trade below these levels, but the close has to be back above it to be good. With a solid close below 218.00 the target becomes 61.8% at 180.00 based on the "38.2% rule".