Fibonacci

[esiotrot]

hi all

I know not everyone is a Fibonacci fan but I came across this example of a great Fib fit.
I was actually eyeballing through stocks looking for range trades when I found DGE, I think I must have put the Fib trendline on a while ago but now it has produced this lovely fit.

what i ahve found is that some stocks will produce fit's similar to this while some just will not behave.

Comments?

BTW - I tried to post this morning but got frozen out of the T2W server database. Apologies if this appears twice!!

 

[Skimbleshanks]

Nice chart - 50% fibs are quite powerful, and they are, supposedly the one to use as stocks often retrace 50% of the prior big move, as you have illustrated on the Diageo chart.

I can also see a very clear head and shoulders pattern there too (well, clear to me anyway), so that does look a nice long term short all the way down to 570 again. Left shoulder is at mid March, head is April, and right shoulder is mid June.

 

[esiotrot]

LOL Skim

I've overlaid a Zig Zag line on the chart (3point reversal) to try to see the H&S. Not sure I do?

H&S in a downtrend is a continuation pattern? It certainly is more often continuation than reversal in a bull trend IHO

I actually thought that we would see a bounce from the 23.6% and a nice uptrend to 710 but I'll wait until I see the next bars. That's why I was looking for range traders.

However let's wait and see.

 

[Skimbleshanks]

The downtrend ends mid February; then there's an uptrend and the h&s is at the top of the uptrend. That's my reasoning, but as with everything two people will see completely different things and that is the beauty of trading.

 

[esiotrot]

So right

 

[cguesty]

Esiotrot,
as Fibonacci is a naturally occuring ratio/sequence it would make sense that it should work better on more liquid, higher volume stocks/index, where herding, fear and greed would be more prominent.

Would be interested in other views.

 

[FTSE Beater]

Hi CGuesty

I have to agree with what you have said. If you take the 2 extremes - DGE worked well as Esiotrot has pointed out, yet some of the smaller companies just move from one place to another on very low volume - not stopping for anything.


Esiotrot - Lovely chart