Fibonacci is commonly used to estimate supports and resistence levels in stock prices. Here we will not get into why it works. But we will simply observe how it could have helped you in the latest Gold crash.
If you use Elliott Waves in your technical analysis, you may already use Fibonacci ratios to determine targets and retracement levels in your charts.
But have you heard of “Fibonacci Clusters?” Here is an example from the recent Gold market action:
Performing multiple Fibonacci calculations of a price move often yields concentrations of Fibonacci levels, which act as barriers to price moves.
How do you create a Fibonacci Cluster of support or resistance?
In the following chart, you can see how to draw a line from the most recent swing high to the relevant low and then connect previous higher highs to the same pivotal low. In the rectangular box, notice where the advance in GCA reversed from a cluster:
Kennedy covers other examples to explain how slingshots, reverse divergence and positive/negative reversals highlight the same momentum signature:
A bullish slingshot forms when prices make higher lows while underlying momentum surpasses previous extremes. Conversely, a bearish slingshot occurs when prices make lower highs while momentum exceeds prior readings.
In subsequent days, Gold prices fell to below $1550.
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EWI Senior Tutorial Instructor Wayne Gorman explains:
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