Fibonacci Retracements

The fibonacci retracements pattern can be useful for swing traders to identify reversals on a stock chart.

To draw it,you start at either the high point or low point of the chart. Start with which ever happened first.

Most important fib lines (for sandp500analyst) are 50 and 61.8.

If stock goes down and comes back up, it is most likely to hit resistance at 50 or 61.8. A close above 61.8 is no longer a play the down side.

Confirmation for the continued move downward would be a close beneath the low of the high candle. Meaning: Stock goes up and hits 61.8. Next day it falls. Day after that, if the stock closes below the low point of the previous day (first day stock fell after hitting 61.8) you have confirmation of reversal.

Long term lines: 123% (for a long term resistance) and -23% (long term support).