Now that you’ve learned about Fibonacci Price Theory Part I and how major and minor Fibonacci Price Pivots help to map out true price structure Part II, we’ll continue our research article illustrating why we believe a deeper price low should take place before a true bottoms sets up in the US and global markets.
Our researchers use a host of available tools and proprietary price modeling systems in an attempt to identify the most likely outcome of future price activity. Within this article, we’re focusing on the Fibonacci Price Theory and our Adaptive Fibonacci Price Modeling system. We just taught you about Fibonacci Price Pivots and how to use them. Now, we are going to go into a detailed analysis of deeper Fibonacci price theory with the NQ (NASDAQ)
Daily Nasdaq Fibonacci Chart
This Daily NQ chart, below, should show you a whole new world if you are viewing the chart bars in the Fibonacci price structure. The recent highs in price, near 8000, have established a minor Fibonacci High Pivot. There is another minor Fibonacci High Pivot back near 9000 in the midst of the sell-off. There are others in this chart as well – see if you can find them.
The structure of price based on Fibonacci Price Theory continues to suggest that resistance will be found near the 7875 or the 8210 levels in the NQ that may prompt a strong Bearish price reversal. The NQ price would have to rally to levels above 9000, at this point, to qualify as a potential Bullish trend based on Fibonacci Price Theory. The minor price pivot high near 9000 can be interpreted at a Major Price Pivot because of the size of the downside price move.
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Weekly Nasdaq Fibonacci Chart
This last chart highlights our Weekly Adaptive Fibonacci Price Modeling system and shows the GREEN Trigger Line on the right side of the chart. The Bullish Trigger level on the NQ Weekly chart is at 8200. This suggests that the NQ price would have to rally and close above the 8200 level to have any type of early confirmation of a potential bullish price trend. If the price were to fail near 8200 and fall below this level, then the bullish trigger is negated.
You can see what our research team expects to happen by the drawn levels on the chart below. We believe a deeper price low must complete in order for the proper Fibonacci price structure to set up a bottom. The next Major low price pivot for the NQ is the 2018 low level near 5824. It is very likely that this level will become the next downside target should the current NQ price rally fail. Remember, failure to establish a new price high means price must attempt to establish a new price low.
A couple of weeks go I published a PDF guide on how to identify market trends both short-term and long-term using some basic indicators.
If you are trying to call a bottom in this market, we urge you to move towards a safer stance in your investing style. We moved our clients into a nearly 100% cash position just before the peak in the markets. Since then, we’ve been very protective of assets and allocated only a small portion of our capital to new trade signals.
This is not the time to get married to any positions or trades. The markets can change in an instant and the volatility is still excessive (VIX above 40)
As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is going to be an incredible year for skilled traders. Don’t miss all the incredible moves and trade setups.
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