Two Scenarios For SOHU…

  • March 8, 2005
  • Derrick Hobbs

SOHU
is at a major Fibonacci price decision zone tonight from 19.70-20.15.
It is such a small zone but has such major implications.

 

First, let’s look at the
scenario where SOHU respects this resistance zone and tucks tail and heads
south. Today the stock printed a doji candlestick, which is a standard reversal
candle. So in the event we trade below this low made on Tuesday the 8th,
I’d consider shorts with a stop around 20.31.  I’d be looking for a move dwon
into the 16 to 17 price range if this all shakes out.

 

Second, let’s look at the
scenario that SOHU has absolutely no respect for the Fibonacci price resistance
zone. In fact, a great trap that would add fuel to the potential broken pattern
would be if…first shorts were triggered in the coming sessions off of this doji
candlestick against the resistance. However, after that, price rallies back
above 20.15. if that happens, then SOHU will likely find little resistance from
20.15 up to the 23 price range. This is what I call an Air Pocket…where no Fib
price levels exists.

 

So you got the two scenarios
that could play out against this very tight and important resistance zone.

 

 

Good night all!

 

Derrik