Rounded Reversal into Exact Fibonacci Confluence on SPY

Aug 18, 2009: 5:08 PM CST

Today’s Rounded Reversal is still the dominant pattern, but what’s more interesting is that price retraced up into a confluence Fibonacci area.  Let’s take a quick look at this and what might be in store.

Drawing two Fibonacci grids from the $98.11 low of August 17th to the $100.81 swing high on August 14th, and then back to the swing high near $101.60 from last week yields the following two Fibonacci price grids.

The 50% and the 38.2% Fibonacci retracement levels align almost exactly at the $99.47 level, which was just shy of today’s intraday high – this level will be absolutely critical to watch in tomorrow’s trading session.

A possible 5-wave Elliott fractal to the downside may be completing, with the 5th wave just around the corner, if not forming already.

To make matters worse for the bulls, a ’rounded reversal’ arc (which I pointed out in real-time today) has formed into this level.

SPY Rounded Arc Intraday:

Typically, a ’rounded arc’ is a gentle reversal pattern that highlights the transfer from demand to supply in an orderly fashion.

The Three-Push negative momentum divergence, along with the negative TICK divergence (shown in today’s earlier post) paint a rather bearish picture.

I describe these structures, patterns, and levels in much more detail in today’s Idealized Trades report (please visit our premium content section for subscription information).

There’s certainly no guarantee price will inflect downward off these levels, but the odds certainly favor a continuation downward move… or at least that reward remains to the downside while reward remains to the downside from a strictly technical (chart) perspective.

Be safe out there and please check back for more updates.

Corey Rosenbloom, CMT
Follow Corey on Twitter:  http://twitter.com/afraidtotrade

11 Comments

11 Responses to “Rounded Reversal into Exact Fibonacci Confluence on SPY”

  1. dougpayne Says:

    while i agree with this, too many times the charts say “going down” and the govt,gs, money manip's pumper her up by letting the shorts get into position and then driving it up forcing them to cover. When does that end?

  2. SPX Notes for 08/19/09 : Stock Discussion, Trading Ideas — iBankCoin.com Says:

    […] Trading up on lower volume than yesterday but with reasonably strong positive breadth (NYSE ended the day at almost 6:1 positive), the SPX, nevertheless, formed an inside day and was unable to to overcome a variety of technical resistance levels near the intraday high of 991.2 including: the 20sma on the daily, the weekly pivot point, previous support from the above range, and the 50% fibonacci reatracement level from last Friday’s close. I find the 50% fibonacci level to be of particular note as it may represent the start of a second measured move down from a 50% retracement level, the first having occurred at the close of last friday and resulting in (due to whichever fundamental and/or technical reasons one may chose to attribute) a gap down on Monday out of our previous range. Other intra-day divergences and resistance levels concerning today’s highs are well noted by Corey (I missed pulling the full fibs from last Friday’s highs to yesterday’s lows) in his analysis (ATT 1, 2). […]

  3. Corey Rosenbloom, CMT Says:

    Doug,

    I'm with you – as are we all!

    Still have to play the odds/probabilities/structure as we understand, and know when the classic odds aren't working. Can't manipulate forever – SP500 can't go to 3,000 straight up. There are impossibilities in the market and what happens is that a 'rubber band' effect is created.

  4. sandew Says:

    Any probable target for the Elliott fractal wave 5 ? – and the wave next thereafter.
    Sandew

  5. What Happens When Key Resistance is Broken | Afraid to Trade.com Blog Says:

    […] perspective on why this breakout is important and somewhat unexpected, please see my post “SPY Rounded Reversal into Fibonacci Resistance” from last […]

  6. chriscrowther Says:

    Corey,

    I don't understand the agreement with the suspicion of the big players – in fact I find it disingenuous because surely all you and Doug are doing is, on that logic, ripping off the 'small players' or 'slower money' – you either accept your competition and compete against it or, if you think its unfair, sit it out: it is a level playing field with profit to be made or lost at each turn and if you don't think its level then you shouldn't play!

    Simple.

    By the way gold never broke 1000 since I wrote to you last and here are two further predictions:

    1) the US and UK will both have GDP growth >3% in 2010
    2) the price of natural gas will triple sometime over the next 12 months

    Chris

  7. Rosarino Says:

    Hi Corey, I always read your blog and it is really very important for my trades.

    I find another fibonacci's confluence, in the monthly and in the weekly chart…. I was wondering what they coiuld mean from the EW theory.

    I post the link:

    http://sailingmarkets.blogspot.com/2009/08/exac

  8. chriscrowther Says:

    Corey,

    I don't understand the agreement with the suspicion of the big players – in fact I find it disingenuous because surely all you and Doug are doing is, on that logic, ripping off the 'small players' or 'slower money' – you either accept your competition and compete against it or, if you think its unfair, sit it out: it is a level playing field with profit to be made or lost at each turn and if you don't think its level then you shouldn't play!

    Simple.

    By the way gold never broke 1000 since I wrote to you last and here are two further predictions:

    1) the US and UK will both have GDP growth >3% in 2010
    2) the price of natural gas will triple sometime over the next 12 months

    Chris

  9. Maximiliano Says:

    Hi Corey, I always read your blog and it is really very important for my trades.

    I find another fibonacci's confluence, in the monthly and in the weekly chart…. I was wondering what they coiuld mean from the EW theory.

    I post the link:

    http://sailingmarkets.blogspot.com/2009/08/exac

  10. One of the Best Intraday SPY Rounded Reversal Examples | Afraid to Trade.com Blog Says:

    […] August 18:  SPY Rounded Reversal into Fibonacci Confluence […]

  11. One of the Best Intraday SPY Rounded Reversal Examples | Penny Stock Trading System Blog Says:

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