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Thursday, October 16, 2008

Tracking the Dow chart

Monday I posted the Dow chart over the past 20 days and noted "...we are approaching what I call the "Retracement Zone", and this area is likely to provide solid resistance". Tuesday I showed how we tagged the 50% retracement and abruptly reversed.

Below is the updated chart. The downtrend continued, and after chopping around the 8,000 level for a few hours (the white lines are 10,000, 9,000, and 8,000), price fell to close below 8,600.

As I stated before, "I don't pay much attention to the bigger picture, and I don't try to predict market direction. It doesn't really matter to me as I trade what the market gives me every day and close out my positions by the end of the session." I am only posting this so you can see the potential in the simple application of basic Fibonacci and support/resistance. The DJIA has fallen 1,300 points since the first post, and there were some solid trading opportunities associated with it.

For in-depth market analysis - something I don't plan to make a habit of providing - see Trader Mike and Trader Jamie; both do a great job.



TL said...

It's so amazing how simple S/R and Fib lines sum up the technical picture in such a simple and clear way. Thanks for the teaching as it's really eye-opening!

Anonymous said...

So you are thinking it retraces to the lows. Do you see it breaking and going to the fib extension?