Your Basic Fibonacci Analysis
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Your Basic Fibonacci Analysis

Henry Gambell - February 9, 2016

Good evening everyone, this is Henry Gambell with, and in today's free video I wanted to follow up on some of the discussion that we had spoken about last Monday, when we were looking at that free video. So, as we were going through that analysis, and I believe it was on this day, we looked at the SPYders for some potential resistance, and we've gone back kind of speaking to some of these previous swings. I've got several different things marked off here. But you can see the general concept we were looking at, given rallies in time, and the idea that this rally in time could put a pause to the rally, kind of right there in the middle of the week.

I love having these concepts, or things that back the idea of more basic analysis that I've always looked at, or that I've always followed, or been taught the idea that the reversion to the 21 EMA is a good place to look for the basic reversion to the mean, and then if that trend is going to continue, it should fail from there. So, knowing that the reversion to the mean has come through, knowing that I had that bit of a timing there for a potential high, all of those were the reasons we were looking for this to play out. Now, we kind of got a little bit later on into the end of the week, but then Friday was the day that I think this really started to play out. You can see the SPY closed down here below the fire line. This was the reversal that I really wanted to see. And we had some great follow-through today, with that on today's drop.

So what do you look at in this move? What is one of the big things you try to decide with this? While the argument could be made that the momentum of the squeeze is still trying to move higher, obviously the general trend of the SPYders is extremely bearish. But the main thing that I want to point out here? Last Monday we speak about symmetry in time, today let's talk about the importance of your 6-1-8 retracement. If you're going to point to this as being any type of a more important low.

So low that we made there at 180-102. From that low, what you want to see is that the pullback to it holds. You'd say, "Well, we haven't broken the lows. So isn't the pullback holding?" This is where that 6-1-8 retracement is so important to me. So. We were able to stay above it on Friday's action, but then gapped below it today. That is a break of that move, and in my mind, this tells me that we're going to take out the 180-102 low, and then push on down into 177 and ultimately 172.64. Now, a lot can happen inside of this, so don't wake up on Tuesday morning and just start blindly shorting this. Remember, my short take on this chart will remain intact as long as we do not clear 194.58.

194.58 is a full ten points from where we're trading here, so give yourself a little bit of leniency, try to work the balance on the way back up. But ultimately, I think you see this pattern fire to the short side, off your time and price and go in on to make a major extension.

So. That was the basics of how those patterns play out. If you can root your foundation in something like that, it can give you an edge as you approach other parts of the S&P. I hope you guys find that helpful.

One other thing I wanted to make you aware of is a free webinar tonight. The free one is going to be with John, but then for the actual class itself, I'll be working this as well. But this is getting started with options, so, if you're new to this and you really feel like this is a little bit overwhelming, this might be something that you want to look at. So today, Tuesday, at 7 p.m. Central Time. John's going to be going over some of these basics. This is 100% free. You can get a feel for if you like the style, if you like the concepts of what we're doing, and I think you'll find it helpful. If that's something that interests you, just enter your email here in the link that will show up after the video, and I hope to see you there.