Fibonacci Boxes
Threading together Fibonacci, Regression Channels and time-frames to define the trend and identify price expectations.
Threading together Fibonacci, Regression Channels and time-frames to define the trend and identify price expectations.
Hopefully you've already read my blog on Regression lines. Now I'm going to use Fibonacci boxes and thread them in with regression channels using these two tools together to give us our price expectations.
Note: From my Dummies book...
Intraday: Entry and exit on the same trading day
Short-term: 3-12 days (average 3)
Intermediate-term: 12-45 days (average 20)
Long-term: More than 30 days
For the Transports, first let me say it was the first to top out. With Fibonacci I've drawn in a 24 day intermediate box, using colors to identify my bullish/neutral/bearish view. I've also drawn in an intermediate 24 day regression channel and a short 6 day regression channel. I based these channels on the last highest swing high, swing low, and the current price. Within the Fibonacci box prices are trading within the bearish red box retracing less than the key 38.2% level. Within the intermediate regression channel prices are approaching overbought levels. Therefore in the intermediate time-frame I'm Bearish & overbought. I don't use Fibonacci in the short term unless I'm using the hourly charts. Watching the 6 day regression channel I see things as Bullish and on target because the channel is rising and prices are near the middle line.
For the NASDAQ 19 day chart, I have the same basic view as the transports. This chart does show more strength based on a test of the 38.2% level, being slightly overbought in the intermediate channel, and slightly higher than the middle line on the short channel. Simply put it looks like a stronger chart.
When compared with the previous two charts you can see the S&P 500 is the weakest. Notice price resides lower within the Fibonacci levels and the two channels.
Now that you've looked at the previous three charts you should be able to see the strength in the S&P 600 small caps. Notice it has broken into Fibonacci's yellow neutral box, closing above the key 38.2% level. It's also trading above the intermediate channel and above the middle line on the short channel. They say small caps lead the way, but I believe that can only be true it one of the Big 3 lead with it.
When the dollar entered the yellow box, stocks started taking a nose dive. You can see on the intermediate channel prices are well within expectations and the same goes with the short channel that is slowly declining. I remain Bullish because prices are still within the green box & the intermediate channel.
Another VERY IMPORTANT note: I sure hope you read this part. On the first four charts those short 6 day regression channels could all be BEAR FLAGS, while the dollar could have a Bull Flag.
I'm in Vegas again next week, thanks, and take care...Jason
