As you can see on the chart below, price met resistance at the retracement zone (RZ) and the Dow reversed just below the 50% retracement. When compared to 10/14, it printed a lower high which can be seen as somewhat bearish. And today it closed back below 9,000.
On the trading front, I was watching PRU this morning. It gapped down and tried to rally but failed at resistance from the RZ. It fell back below the 50% retracement and I entered a short when price printed a bearish inside bar (see the white arrow). I covered my position at the Fibonacci extension.
As you can see on the chart below, PRU moved sideways but eventually rolled over and made another move down; in retrospect, it would have been wise to hold onto half of my position and take advantage of the continued weakness. But it was still a great trade...you can't always catch the low!
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3 comments:
TraderX,
On a 5 min. chart, do you plot the fib. lines in the same way as on a 15 min. chart - from previous day high to the first bar low for a gap down stock?
Loved your fibonacci post. Do you only use the 50% fib. retracement as support and resistance and the 38% fib. extn. as target?
Hey guys - you can find answers to your questions here and here.
Thanks!
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