Fibonacci Retracement level 61.8%
Hi,
I made a total of $880 today ( before commission). Market was not really trending, but price movement was swift and decisive and I just felt that I have to be in the market. There was a huge rally from 10:00 till 11:00 am, but I missed it. I decided to wait for it to retrace. Price was at an overbought condition at 11:00 am and when it spiked down by 2 points together with stochastics crossing the overbought line, that was enough signal for me to short it. I shorted one contract at 1703, and another 2 at 1699. When priced touched the moving averages at 1693, I covered my shorts and this translated to $440. Price fell even further to 1685. At this point if you observe carefully, price has moved from 1706 to 1686, a 20 point move, in a matter of an hour. It is reasonable to expect the second half of the market session to concentrate on a retracement. I drew a fibonacci line from peak to trough ( 1706 and 1686) and planned my exit target at retracement level 50% which is at 1696. I longed 1 contract at 1688 and another 2 contracts at 1690 with my profit target at 1696. This trade lasted for around 80 minutes and I was automatically exited at 1696 with a profit of $400. On hindsight however, price retraced all the way to 1698 which is the 61.8% fibonacci level.
Comments
What platform do you use for trading. and is MACD your main tool you use?
Posted by: jon | March 26, 2006 12:21 PM
Hi, I use Interactive Brokers for trading and Qcharts for real-time charting.
MACD is one of the tools I use for trading, I have develop a proprietary system using multiple MACD to track trends in different time frames.
However, you should be aware that MACD constitutes only part of the technical analysis arsenal that you use in day trading. MACD should be used in tandem with Moving averages, Price action, support and resistance lines and stochastics. Which tool is more important, depends on market condition and experience.
Posted by: Michael Taylor | March 27, 2006 11:44 AM