Yesterday was Labor Day, and although the markets were “closed” my data provider showed several hours of trading. Just enough that I didn’t trust my indicators for early action.
Today was a great example of using Fibonacci for potential exits. At 8:00 am (Pacific) there
was a pullback trade using a Stochastic oversold signal. At the time we were below both of my moving averages, so I used a break of those averages as my entry. Measuring the retracement of the pullback gave a zone of potential reversal between the 127% and 161.8% Fib levels. This doesn’t mean automatically exit – just watch price action in this important zone. But notice the precise reversal.
10:30 gave a pullback short signal, although the Stochastic never reached overbought. However I place a lot of emphasis on my moving averages, so I cautiously took the trade as the shorter moving average was broken. And once again measured the pullback to find the danger zone and another reversal. Again at 161.8 percent. They don’t always work, but you’d better believe I mark them on my charts.
