Friday, May 01, 2009
Fibonacci Confluence in the NASDAQ May 1
Let’s take a quick look at the levels of Fibonacci Confluence in the NASDAQ Index as we start May, 2009.
The Fibonacci grids I’ve drawn begin at the 1,280 March low level and connect three key swing highs - the colored retracements are the result of these levels and we are looking at the confluence price zones identified by these overlapping grids.
The most significant confluence zone comes in at the 2,050 level, with the next confluence zone coming in at the 1,900 level. Notice the ‘open air’ between these zones. The implication is that if price breaks above one of these zones, odds are it will run up to the next zone of confluence for possible resistance.
We are currently in an area of overhead confluence Fibonacci resistance at the 1,750 level, as price tested this level and currently is failing to overcome the 38.2% Confluence area. With eight consecutive weeks of gains, it would be distinctly against the odds to see a ninth and tenth week (and beyond) of gains.
That’s not to say that it can’t happen or that bulls can’t push us through the Fibonacci confluence levels, but the odds are overwhelmingly stacked against them and that risk clearly remains to the upside (odds favor an inflection or retracement down off resistance rather than breaking through it).
This chart represents a quick glance at Fibonacci confluence. Continue studying the chart for additional insights going forward.
Corey Rosenbloom, CMT
Afraid to Trade.com
