Fibonacci Retracement Reference Levels on the US Indexes

Mar 9, 2010: 6:59 PM CST

Today’s post at the Green Faucet’s Technican’s Edge Column serves as a reference for the current dominant Fibonacci Retracement levels to monitor.

I’ll re-copy some of the charts here, but the full commentary is at the column.

Traders and investors monitor Fibonacci Retracement Levels for the following reasons:

  • to take profits once a level is reached,
  • to consider shorting if price finds resistance at a level,
  • to signal the “all clear” to continue trading long once a resistance level is broken to the upside

Here are the retracements from the 2007 market top to the 2009 bottom:

Dow Jones:

S&P 500:

NASDAQ:

Russell 2000:

Fibonacci Levels are not magic, but sometimes they can create little “self-fulfilling prophecies” when price comes into one of these levels.

These charts can serve as a permanent reference of the dominant retracement levels going forward… but do note that the NASDAQ and Russell 2000 have exceeded the upper 61.8% retracement in a bullish break.

It would be a strong bullish argument for higher prices if these indexes can hold above these levels.

See full post at the Green Faucet site for additional comments.

(Charts created with TradeStation)

Corey Rosenbloom, CMT
Afraid to Trade.com

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

6 Comments

6 Responses to “Fibonacci Retracement Reference Levels on the US Indexes”

  1. Jack Damn Says:

    For a contrarian point-of-view on Fibonacci, this article is an interesting read:

    Fibonacci Flim-Flam
    http://www.lhup.edu/~dsimanek/pseudo/fibonacc.htm

    “Mathematics doesn't “explain” anything in nature, but mathematical models are very powerful for describing patterns and laws found in nature. I think it's safe to say that the Fibonacci sequence, golden mean, and golden rectangle have never, not even once, directly led to the discovery of a fundamental law of nature. When we see a neat numeric or geometric pattern in nature, we realize we must dig deeper to find the underlying reason why these patterns arise. “

    I only use Fibonacci retracements in analysis, but I never use them when designing trading programs. I don't trust them as trade triggers.

    =^.^=

  2. TheYenGuy Says:

    The Fed's monetization of the banks through TARP, Dollar Swaps, other Federal Reserve facilities, and committment to the debt of Fannie Mae and Freddie Mac, has inflated debt, stocks, oil and gold. A “debt carry trade”; that is a swapping out of US Treasuries for toxic mortgage and other debts, has liquified the global financial markets, much as the “yen carry trade” of days past, where investors sold yen and invested in high yielding currencies and in emerging nations for fantastic gain.

    The greatest gain over the last year, since the Fed began its “recovery operations”, has been in the following ETFs: QTEC, XHB, XRT, SLX, XME, and the Brazil ETF, BRF, as can be seen in the following Yahoo Finance Chart: http://tinyurl.com/y8gptmu

    Your article today shows the Fibonacci Retracements for The Dow, The S&P, The Nasdaq, and Russell 2000; the latter two have expeienced the greatest Federal Reserve monetization as they have gone beyond 61.8% retracement. The Fed Effect has been greatest on the growth stocks, that is the Nasdaq, and the credit sensitive small US companies, the Russell 2000.

    Look for a market turn at any time … a break could come from any reason. I strongly encourage one to own the gold ETF, GLD, in a trust account — not a brokerage account, British Sovereign gold coins, and buy gold at Bullion Vault.com

    If you like visit my site for lots of daily informative articles on Personal Finance … Great charts Corey

  3. Jack Damn Says:

    For a contrarian point-of-view on Fibonacci, this article is an interesting read:

    —-
    Fibonacci Flim-Flam
    http://www.lhup.edu/~dsimanek/pseudo/fibonacc.htm

    “Mathematics doesn't “explain” anything in nature, but mathematical models are very powerful for describing patterns and laws found in nature. I think it's safe to say that the Fibonacci sequence, golden mean, and golden rectangle have never, not even once, directly led to the discovery of a fundamental law of nature. When we see a neat numeric or geometric pattern in nature, we realize we must dig deeper to find the underlying reason why these patterns arise. “

    I only use Fibonacci retracements in analysis, but I never use them when designing trading programs. I don't trust them as trade triggers. Back testing of Fib levels yields some pretty dismal results.

    =^.^=

  4. TheYenGuy Says:

    The Fed's monetization of the banks through TARP, Dollar Swaps, other Federal Reserve facilities, and committment to the debt of Fannie Mae and Freddie Mac, has inflated debt, stocks, oil and gold. A “debt carry trade”; that is a swapping out of US Treasuries for toxic mortgage and other debts, has liquified the global financial markets, much as the “yen carry trade” of days past, where investors sold yen and invested in high yielding currencies and in emerging nations for fantastic gain.

    The greatest gain over the last year, since the Fed began its “recovery operations”, has been in the following ETFs: QTEC, XHB, XRT, SLX, XME, and the Brazil ETF, BRF, as can be seen in the following Yahoo Finance Chart: http://tinyurl.com/y8gptmu

    Your article today shows the Fibonacci Retracements for The Dow, The S&P, The Nasdaq, and Russell 2000; the latter two have expeienced the greatest Federal Reserve monetization as they have gone beyond 61.8% retracement. The Fed Effect has been greatest on the growth stocks, that is the Nasdaq, and the credit sensitive small US companies, the Russell 2000.

    Look for a market turn at any time … a break could come from any reason. I strongly encourage one to own the gold ETF, GLD, in a trust account — not a brokerage account, British Sovereign gold coins, and buy gold at Bullion Vault.com

    If you like visit my site for lots of daily informative articles on Personal Finance … Great charts Corey

  5. Fibonacci Retracement Levels For U.S. Markets : The Disciplined Investor Says:

    […] over at Afraid to Trade a a good set of charts that helped show the exact Fibonacci levels for a fe of the dominant U.S. […]

  6. Bullion Eagle Says:

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