Whole Lotta Shakin’
Did you get caught in the
“wash cycle” today after the Fed announcement? Today is a great example of how
important Fibonacci Extension levels are. I am specifically referring to the
1.272 and 1.618 extension levels. Many times these extensions are levels in
which a swing will terminate, at least short term. Check out a 5-minute chart
of ES2Z below:
Point A = Today’s Opening
Point B = Swing Low Before Fed Announcement
After the Fed made the .50
bps cut announcement, the market rallied hard. Where was it headed? Right up
to the 1.272 extension of Swing AB (which was at the time the day’s current
high and low). Then the market does a 180 degree turn and drops 20 pts in 15
minutes! Where does it drop to? Swing point D was made between the 1.272 and
1.618 extension of Swing BC.
Moral of the Story: Jerry
Lee Lewis* may have seemed like he was out of control when he was on stage performing,
but that boy had a method to his madness. Today’s market action seemed out of
control there for a few minutes after the Fed announcement but there was actually
a “Whole Lotta Order” goin’ on.
Good night!
* The author
is not condoning the music and/or lifestyle of Mr. Lewis.