Practicality of Fibonacci Retracements

[Raul641]

The S&P open yesterday and today were both at the 38.2% retracement of its recent high to recent low. Today we got a huge selloff.

Prices seem to reverse at Fibonacci retracement levels often enough to be interesting, but they also seem to ignore the Fibonacci levels often enough to make it impractical as a trading indicator.

How do you all use the Fibonacci levels in your trading, if at all? Is it only as another confirmation for other indicators or theories?

Cheers.
R

 

[phillyflipper]

Raul, I have been studying this very subject for about 3 months now. An Excellent book that helped me is by Larry Pesavento
Fibonacci Ratios with Pattern Recognition. It is 49.00 and worth much more. If you want to discuss this further you can PM me with your phone number and I will call you. I am looking for people to talk to about this because it helps me learn also.

The fact that you noticed that the indexes could not penetrate the .382 retracement is telling you that the down trend is strong so far.

 

[Raul641]

The S&P couldn't penetrate the 38.2%, but it had no problem with 23.6%, which does not seem to have been a significant brake on price action at all. What does this mean?

Thanks for the tip on the book, I'll look for it.

 

[gpgpgod]

I would also recommend adding Dianapoli Levels to this discussion.
Its another way of confirmation to Fibo, I wonder if any of you are using it.

 

[phillyflipper]

Quote from Raul641:

The S&P couldn't penetrate the 38.2%, but it had no problem with 23.6%, which does not seem to have been a significant brake on price action at all. What does this mean?

Thanks for the tip on the book, I'll look for it. [/QUOTE

.382 is the first area to watch, when you watch smaller levels you can get caught up in the chop. .618 and .786 are common reversal areas on ER and NQ on smaller time frames

there is much more to this then just throwing on these numbers and taking trades. It is how the market responds at these numbers, which will not truly be known until after the fact

 

[murray t turtle]

Quote from phillyflipper:

Quote from Raul641:

The S&P couldn't penetrate the 38.2%, but it had no problem with 23.6%, which does not seem to have been a significant brake on price action at all. What does this mean?
. [/QUOTE

.382 is the first area to watch, when you watch smaller levels you can get caught up in the chop. .618 and .786 are common reversal areas on ER and NQ on smaller time frames

there is much more to this then just throwing on these numbers and taking trades. It is how the market responds at these numbers, which will not truly be known until after the fact

=================
Rau;
Could add to PhillyFlipper
-50%.

Its also easy to ''do the math '' on 50 level realtime;
have enough ma, trendlines, grids, other tek analysis,
that i dont use all of them very often on candlecharts,anyway

It also means,not even a good test of 50 day moving average[qqqq,ES SPY......;
which even bear markets do some

 

[phillyflipper]

Also, when the markets move past a previous swing high or low
the next important Fibs are 1.27 and 1.618 for a possible reversal

 

[phillyflipper]

here is a .786 area that was hit today

 

[phillyflipper]

779 may provide some resistance .382 but if we move above it we can trget .618 area 784.20

 

[phillyflipper]

tou can see from a 5min chart from today that 786 is providing resistance.....but you also have the influence of the other larger cycles in play also