Daytrading With Fibonacci Retracements
The Fibonacci retracement levels is a theory I find often works. If I miss a run in a stock I will often setup my charts with fibonacci support levels and wait for the stock to retrace, if it bounces off any of these levels I will enter. This can be used in long term and daytrading charts.
Sample: If the Nasdaq rallies 100 points and then corrects, it will often correct 61.8%. Right at, or close to the 61.8% retracement (you have heard us use this term many, many times) the Nasdaq is likely to reverse and start advancing again. Of course it is not this simple. Fibonacci support and resistance levels can fail. There are other Fibonacci levels which may turn the markets (78.6%, 127.2%, 161.8%, etc.). But the fact that it does happen is what is called a trader’s “edge.”
These levels are often used with the Elliot Wave theory that states most stocks will move in 3 and 5 waves.
IFON had a run intra-day run and bounced off fibonacci levels for quick daytrades.
