Pre Fed Fibs Fuel Emini Rally
December 11, 2012 at 9:16 PM (QQQ)(DIA)(SODA)(AAPL)(BAC)
by DeWayne Reeves
Fibs Ahead of the Fed | How About After?
Monday morning we took a close look at the Fibonacci retracement on the hourly chart during our Live Daily Radio Broadcast. Based on the swing low at 1410.75 and the swing high at 1421.00, we determined the area that would need to hold on a pullback to keep the rally intact. Here is the chart -
S&P500 Emini Fibs - Hourly Chart
The initial leg was only 10.25 points. This is beneficial because it creates a small strike zone. Fibs are an area and nothing more. If they are going to provide support in this scenario we will look for that to happen between the 38% and 62% retracement levels. On the radio program we drew a circle around 1415.88 which represented the 50% retracement level, or the middle of the strike zone.
As you can see on the chart above, Price pulled back not once, but twice to the 50% Fib. The first pullback was what we call a "touch and go landing" as evidenced by the long wick. With our methodology, this is a heads up price will return to the area for further consolidation. 5 hours later that is exactly what happened. Price consolidated at the 50% fib for 2 hours and left in it's wake, 2 fine little Doji's. Not every Doji marks a reversal in the market, but at many reversals, you will find a Doji.
The market found solid footing and we were then able to use our Fib Extension Tool to project exact levels on the upside as potential targets. The next chart shows those price targets as determined by the Golden Ratio and the self fulfilling nature of the forecast itself.
S&P500 Emini - Fibonacci Price Extensions
Price moved right up the 161.8% Fib Extension. For anyone who has done any research on Fibonacci as a confirmation tool, you are most certainly familiar with the 1.618 and 161.8 numbers. If you are new to the world of Fibs, these articles are great jumping off points.
- Fibonacci Tips For Emini Futures Trading
- Fib Tips For Emini Traders - Part 2
- Fibonacci Extensions For Emini Traders
Fibs are everywhere in nature and they can be a wonderful tool for confirmation of whatever trading method you employ in the markets. My strongest word of caution is that you do not attempt to use Fibs as a stand alone trading method. I have seen grown men cry.
Weekly Trading Zones
The Weekly Trading Zones have done a splendid job so far this week. Remember, this isn't magic. This is capturing the underlying rhythm of the market and simply following the flow wherever it takes you.
The chart below is large so you will need to click to enalrge it. -
;)
Weekly Trading Zones
Here's a brief synopsis of what we have seen so far this week.
- A) Price consolidated at the WTZ for 6 hours.
- B) Price sliced through the WTZ in 1 hour. That's a sign, "I'll be back".
- C) Price returns to the WTZ and coils for the next 14 hours.
- D) Price advanced to the next rung on the ladder and goes quiet for 4 hours.
- E) Price reaches the High of the Day and rests for 5 hours.
- F) Price drops back to the WTZ below and returns for the last 8 hours.
None of this is uncommon at all. In fact, as you walk through our web site and charts, you will see this behavior repeated again and again and again. It's not anything "we do", it's what the "market does". Our tools just help to make it obvious so you can use it to simplify your trading.
Questions on our Weekly Trading Zones? Email TheZoneRanger@cfrn.net
Last Night's S&P Tweet -
ESZ2 consider being long above 1418.50. Will update with targets and stops if triggered. Always use a hard stop / server side. $ES $ES_F #es
— DeWayne Reeves (@CFRN) December 11, 2012
S&P500 Emini Futures - TWEET
As opportunities unfold we'll keep you posted.
Questions?
Call us toll free @ 866-928-3310 during normal business hours.
After Dark - email support@cfrn.net or call 415-857-5654
Connect with us: 
Please leave a review on iTunes
Reader Comments