Dec 9 Intraday Divergence and Fibonacci Confluence Opportunities

Dec 9, 2009: 3:05 PM CST

I wanted to highlight another ‘intraday confluence’ Fibonacci post to show the confluence resistance that came together at the morning $110.00 high in the SPY as a good educational example of “quick” Fibonacci trade concepts.  Let’s see it:

The quick explanation is that we draw two simple Fibonacci Retracement Grids starting with the two prior swing highs at $110.95 and $111.52 and then connect those to the morning low of $109.02.

The following grids come together, and mark a key “Confluence” resistance level at the $109.99/$110.00, which also happens to be “Round Number” resistance.

That was a target to play for if playing counter-trend long, and then a target to “get short” particularly if a reversal candle such as a doji or shooting star formed into this confluence area… and that’s exactly what happened.

Price formed a long upper shadow at 10:00am CST and then price broke beneath the low of that candle, triggering a short sale entry with stop above the confluence at $110.00.  Price retraced all the way to the morning closing (but not spike) low near $109.20 over the next few hours.

Here’s another look using StockCharts instead of TradeStation:

We see a lengthy positive momentum divergence forming on the lower timeframes at the key support level of $109.00 (the bottom of the lengthy range we’re in).

As such, watch for upward movement and a break above the confluence resistance areas as noted above, as it would appear price is trying to form a “Rounded Reversal” off this level.

Any move under $109.00 would be likely treated as a “breakout” move and could trigger more range expansion lower, but until then, as long as the $109.00 support level holds, the positive divergence tips the favor to the upside.

A break above these Fibonacci confluences at $110.00 and $110.25 would confirm that bullish bias.

I’ll discuss this in more detail as well as additional key levels to watch going forward in tonight’s Idealized Trades Membership report.

Join now to learn more about these intraday concepts and examples and to monitor these levels with me!

Corey Rosenbloom, CMT

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

6 Comments

6 Responses to “Dec 9 Intraday Divergence and Fibonacci Confluence Opportunities”

  1. Dan de Man Says:

    Hi Corey,

    Thank you and as usual you are spot on my friend! There are lots of possible plays today:

    EEM: http://stockcharts.com/h-sc/ui?s=EEM&p=D&yr=0&m

    And for the really aggressive who like to play oversold bounces SLV:

    http://stockcharts.com/h-sc/ui?s=SLV&p=D&yr=0&m

    Cheers,
    Dan

  2. pipercolt Says:

    We can see the only trade you had was that confluence area but how would you know it wouldn't have retraced up to that next level even with the shooting star. not sure what i'd do but interesting perspective for sure.

  3. Verde Says:

    Great trade to Short at $110 today… Nice Fibonacci Clustering… Just wanted to share a thought on how the SPY might open tomorrow morning… I don't know what people think of Chart patterns, but there had been a pattern holding true for the past several weeks and it siggests that we Gap up avobe $110.34 tomorrow and head back up to the $111.40 price point… I posted some charts to support this, what do you think? Any comments?

  4. Dan de Man Says:

    Hi Corey,

    Thank you and as usual you are spot on my friend! There are lots of possible plays today:

    EEM: http://stockcharts.com/h-sc/ui?s=EEM&p=D&yr=0&m

    And for the really aggressive who like to play oversold bounces SLV:

    http://stockcharts.com/h-sc/ui?s=SLV&p=D&yr=0&m

    Cheers,
    Dan

  5. pipercolt Says:

    We can see the only trade you had was that confluence area but how would you know it wouldn't have retraced up to that next level even with the shooting star. not sure what i'd do but interesting perspective for sure.

  6. Verde Says:

    Great trade to Short at $110 today… Nice Fibonacci Clustering… Just wanted to share a thought on how the SPY might open tomorrow morning… I don't know what people think of Chart patterns, but there had been a pattern holding true for the past several weeks and it siggests that we Gap up avobe $110.34 tomorrow and head back up to the $111.40 price point… I posted some charts to support this, what do you think? Any comments?