Thursday, September 19, 2013

Fibonacci and psychology overturn the market

The other day, one market analyst tells me that 5.96 is a strong resistance as it is significant Fibonacci level. I ask him for his chart ... and indeed it was. You just need to really zoom out and look at the downtrend that started back in November 2012. On the other hand, 6.00 is a strong psychological level to break - so you can see how technical and psychological analysis can set the market to your advantage. For us more important now should be the level of 5.14 - also a Fibonacci level - and 4.90 - the recent heights.

Recently have I written about the Shooting Star formation and the probable market (chart) behaviour, once this pattern emerges. I would like to highlight (please compare with circled patterns in the chart below) few examples from not so distant past, where the Shooting Star signaled a change of trend.

Does this all mean we are under a strong influence of 3 bearish factors? Is this the right time to sell? You don't climb a mountain the same way you run a 100m sprint; you need to take pauses on your way to the top.

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