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Thursday, November 06, 2008

110608 - Thursday's action

Last Friday on my "Tracking the Dow chart" post I said "...I will make one observation - there is a lot of resistance overhead with the RZ and Dow 10,000...".

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!



Anonymous said...


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?

Thomas said...

Loved your fibonacci post. Do you only use the 50% fib. retracement as support and resistance and the 38% fib. extn. as target?

Trader-X said...

Hey guys - you can find answers to your questions here and here.