FIB RetracementsLast week I was asked if I look at Fibonacci retracements and if I use them. The answer to both questions is yes. Here's a good example of the numbers I like to watch on my charts (see retracement and extension percentages). Now looking at this chart one has to wonder if these numbers actually mean anything or is it traders who make them work... There's still some debate on this one and there will be for a long time I think. Never the less, they do seem to work. There's also an Indication candle on December 1st, something I have been talking about in the last few newsletters. Long candle bodies with long candle wicks, or tails, pointing in the direction where the price will go over the next week or so.
There's also another formation that was in play here... A Head and Shoulders pattern and with the price having retraced to where it has, I believe the pattern is complete and its time for the price to go back up. I'm not looking for much this week on ATAC Resources and my target from the current price is the 78.6% FIB line, giving you gains of 11.3% with the initial target being $6.17. I like to see this price level first and then deciding if the indicators have the momentum to carry the price to the next target of $7.34 for gains of 32.4%. This would bring it back to the 100% FIB line.
By the way, some people like to see the 100% at the bottom. It doesn't matter, if you flip the FIB retracement around, the line (percentage lines) stay at the same place, just the values are also reversed. I like to think that the price went from 0 (the bottom and where I place the 0%) and moved up to the 100% line. The other way is too pessimistic. The price retraced 100%, has a bad ring in my ears and why are you still in a stock where the price has retraced 100% in the first place!!! lol!
See chart here and other weekly picks here.
Cheers!