Monday, August 17, 2009

FIbonacci Confluence

First off, I have to point out that I missed one price segment that I could have traced out on 8/14. This was the 1012.73 high - 994.60 low. A projection of 1.618 x this segment placed price right on the money with the other two clusters at 983.

Additionally there was a fourth segment that also landed at the same spot as well. I did not label it on the chart because it was getting too crowded and busy with the labels. Needless to say there were a total of four Fibonacci clusters at 983.

Obviously price hit that area today. However, the lesson here is that it would have given me an even greater degree of confidence that price would land here. Live and learn.

Well it looks like we are seeing a cluster yet again. Using the aforementioned price segment, labeled in green and the segment from today's drop, labeled in purple, we find a cluster at the 965 level.

Once again, this should give me the confidence to stay in the trade until price reaches this level. This dosen't mean, however, that we may not see a retracement first. If we do, I am expecting that to be a wave iv of some degree.

This new cluster makes me wonder if 965 now becomes a possible wave 3 of another degree. Perhaps my wave labels are incorrect and my wave (a) should be changed to (i) and (b) should to (ii). That would make this a wave (iii) that may possibly extend.

We won't know for sure, but you can bet I do feel more confident that price will reach this level. What wave and at what degree TBD.


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