Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Thursday, August 24, 2006

Using Fibonacci Retracements

I was asked this question in my recent comments after posting a NASDAQ chart with Fibonacci retracement levels:

“How do you find the fibonacci levels of a stock? Is it part of your screening tools or?

I ask as i've never tried to implement fibonacci analysis in my swing/day trades, however of late since i've been following your blog, you seem to talk quite a bit about it”


I answered the question with a quick link to a Fibonacci calculator I use and then realized that I don’t have a blog entry for understanding Fibonacci numbers. So instead of rewriting what has already been done, I have decided to point you all to a great blog entry titled How to Use Fibonacci Retracements To Trade Stocks by Craig over at the Swing Trading Guide or better know as the Taz Trader Blog

I use Fibonacci retracements for longer term outlooks for major indexes but sometimes use them for individual stocks that may be catching solid support along the 200-d moving average. The most important thing to know is that it is only a secondary indicator in my arsenal, not a front line tool.

If you look at the attached NASDAQ chart, you can see how the index has stalled near the first retracement level as I indicated last week prior to the advance. I suggested a brief consolidation before the NASDAQ looks to move towards the 50% retracement level near 2,195.

By the way, Stockcharts.com has a built-in Fibonacci tool that allows me to draw the levels within seconds. A great tool for their annotated charts!

Piranha

3 Comments:

At 3:32 PM, Blogger Yaser Anwar said...

Thanks Chris!

 
At 6:16 PM, Blogger Craig said...

Thanks for the mention Chris!

Now I just have to write the pages on Fibonacci extensions, Fibonacci expansions, Fibonacci projections...

(the website work never ends!)

;)

 
At 11:25 PM, Blogger Chris Perruna said...

Welcome to the both of you!

 

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