Current Fibonacci Confluence Grid of the SP500 June 23
Here is an updated, ‘zoomed-in’ chart of the current Fibonacci confluence retracement grid of the S&P 500:
First, let me explain the method:
This is derived from Constance Brown’s book “Technical Analysis for the Trading Professional” which describes how Mrs. Brown applies Fibonacci analysis from key swing highs to a common swing low.
Without disclosing her methods (I have obscured the left side of the chart), I have taken the March closing low and drawn four Fibonacci grids to the November highs near 1,000 (which you can see on the chart), August highs near 1,300, May highs near 1,430, and finally the November 2007 market high near 1,570.
Using TradeStation, the program drew in the appropriate retracements and we’re looking for areas of confluence… as well as ‘open air’ between Fibonacci nodes (lines).
Without getting any more technical than that, the main idea here is to keep our eyes on the 879 -885 level which reflects the 61.8% retracement of the November 2008 highs as well as the 23.60% (which is a Fibonacci number) retracement of the 2007 market high – this level could prove to be significant.
One would expect possible support here which could lead either to a “head and shoulders” pattern forming or price moving to the 1,000 level potentially to test the November highs.
However, if price breaks downward through this confluence level, that would be hugely significant and would forecast lower prices yet to come (you see the levels on the chart that would be important to watch in that sense which could set-up a test of the lows if the selling intensifies). I lean more to thinking confluence support will break, but we’ll soon see.
For now, under the “next likely swing” theory, let’s keep our eye on the confluence that has formed around 880, which also reflects prior significant support from the May 2009 lows.
Please join me as the MoneyShow.com rebroadcasts my presentation “Idealized Trade Set-ups for the Intraday Trader” on July 1st at noon EST – I’ll be there on a free live chat to answer questions through the presentation.
Corey Rosenbloom, CMT
Afraid to Trade.com
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I have no idea why you are using the November 2008 highs at roughly SPX 1000 when you are setting-up your fib retracements. While that level ( and the March 2009 low ) would help one to calculate where the SPX could have topped out this month, these points have nothing to do with how one would use a fib retracement for the current decline off the June 11th high at 956.23
Perhaps, but might I suggest you read Mrs. Brown's book for more information as to the specific method I'm using and why I'm using it.
Perhaps, but might I suggest you read Mrs. Brown's book for more information as to the specific method I'm using and why I'm using it.
I have no idea why you are using the November 2008 highs at roughly SPX 1000 when you are setting-up your fib retracements. While that level ( and the March 2009 low ) would help one to calculate where the SPX could have topped out this month, these points have nothing to do with how one would use a fib retracement for the current decline off the June 11th high at 956.23
Perhaps, but might I suggest you read Mrs. Brown's book for more information as to the specific method I'm using and why I'm using it and why that level does have significance.
It's also based on the “Price Polarity Principle” old resistance becomes new support.