Today the market failed to close above the almighty 200 day moving average. The abrupt about face shows that this moving average could now be a substantial resistance line. I’ve drawn a fibonacci fan for the latest down move to show how prices have been hugging those levels. Since Monday is a holiday, Tuesday (6/1/10) should be an interesting day as the 200 day moving average will converge with the upper most fan line. As some of you know I am not a huge fan of using fibonacci analysis because prices can deviate from this method quite a bit but it is interesting to see how prices behave when they do adhere to it. In this market condition, I would recommend either sitting on the sidelines or trading primarily short.
You must log in to post a comment.