Dec 7 Lessons on Intraday Fibonacci Trades

Dec 7, 2009: 6:02 PM CST

Today’s trading activity gave a great opportunity for me to discuss intraday Fibonacci and how it can be useful for uncovering support and resistance levels that others might not be seeing.  Let’s take a look at two dominant Fibonacci grids that were very helpful in guiding today’s trading session.

Starting with the “Jobs Report” Friday high of $112.38, we then draw a Fibonacci grid down to the intraday lows of $110.04 and then the computer shows us the proper Fibonacci Retracements as labeled above.

We are thus using the Fibonacci grid in this case to look for possible overhead Resistance levels that we will use as shorting opportunities should we find reversal candles, divergences, or other sell signals.

In this case at noon CST, price slightly breached the 38.2% level at $110.94 and then collapsed to test the prior morning low.

Still in retracement mode, price rose and formed an intraday high this morning at the 61.8% Retracement of the same grid at $111.50.

Price then reversed down again to challenge a prior support level just above $111.00 (Friday’s close).

Not to be outdone, price rallied once again to the $111.50 “61.8% Fibonacci” Line before forming internal momentum divergences and two long-upper shadow doji (reversal candles).  That gave a low risk (stop above $111.55) play to challenge the $111.00 level again.

Price cracked hard through this level, and we then turned to a second Fibonacci grid for help.

Starting with Friday’s $111.05 lows and drawing a Fibonacci grid to the morning highs of $111.53, we then get this grid above.

After breaking prior support, the first target became the 50% retracement at $110.79, and when price broke this level handily, the next target became $1110.62 to exit shorts/consider getting long if there’s a reversal candle or divergence at that level.

Price rallied quickly to the $110.80 level again and then ‘double bottomed’ on the 61.8% retracement at $110.62 before rising into the close.

It only takes a few seconds to draw a Fibonacci grid (depending on your software) and you don’t have to keep the grid up all day.  You can draw it quickly once, and then write down the numbers as references so that you keep your chart as clutter-free as possible.

This is an example of the “Teaching Moments” I share in each “Idealized Trades” Daily Reports to subscribers.

Not only to I highlight key educational information that you can begin using immediately on the next trading session, or incorporating into your growing trading arsenal, I also discuss possibilities and opportunities to watch for the next trading session.

I’d love to have you as a member to help you increase your knowledge and thus confidence for spotting and then trading these opportunities each day!

Corey Rosenbloom, CMT

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

9 Comments

9 Responses to “Dec 7 Lessons on Intraday Fibonacci Trades”

  1. graspthemarket Says:

    Cory,

    I noticed the exact same retracements today. Thanks for explaining those and confirming my observations. Also, from a previous discussion between you and I, I used your advice and I tried to simplify the Elliott Labels for my charts. I think you were right about if things look too complicated, than it might not be labeled correctly. Thanks for that. Here's a question: what do you make out of all of these gaps in the charts that seem to come up during the course of the day? Is it normal to have all of these gaps from your experience?

  2. Corey Rosenbloom, CMT Says:

    Thanks for your comment!

    No, all these gaps are not normal, at least, not the frequency and size of the gaps. So much is happening now overnight in the futures market, so technically the price is trading within these levels but by the time we wake up to the SPY or other market index, there's a big gap.

    It can be indicative just that trading is now stretching out to be a 24-hour affair which isn't so bad, but it's tempting to look at it and say “Ohh something must be going on” and perhaps it is, and it's strange that, with all these large gaps, we remain in a tight trading range between $111.50 and $109.00.

    Could be that an eventual move out of those boundaries could be very powerful.

  3. Bear Bear Says:

    Good stuff, thanks for the post

  4. Dominick Says:

    Love those intraday posts Corey. Thanks.

  5. graspthemarket Says:

    Cory,

    I noticed the exact same retracements today. Thanks for explaining those and confirming my observations. Also, from a previous discussion between you and I, I used your advice and I tried to simplify the Elliott Labels for my charts. I think you were right about if things look too complicated, than it might not be labeled correctly. Thanks for that. Here's a question: what do you make out of all of these gaps in the charts that seem to come up during the course of the day? Is it normal to have all of these gaps from your experience?

  6. Corey Rosenbloom, CMT Says:

    Thanks for your comment!

    No, all these gaps are not normal, at least, not the frequency and size of the gaps. So much is happening now overnight in the futures market, so technically the price is trading within these levels but by the time we wake up to the SPY or other market index, there's a big gap.

    It can be indicative just that trading is now stretching out to be a 24-hour affair which isn't so bad, but it's tempting to look at it and say “Ohh something must be going on” and perhaps it is, and it's strange that, with all these large gaps, we remain in a tight trading range between $111.50 and $109.00.

    Could be that an eventual move out of those boundaries could be very powerful.

  7. Bear Bear Says:

    Good stuff, thanks for the post

  8. Dominick Says:

    Love those intraday posts Corey. Thanks.

  9. Trading Tips Says:

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    regards:
    Trading Tips