Hey all, I have a few requests to cover certain market patterns which I will be getting to pronto, this is a quick guide covering market retracments.
Previously on my trend line guide we learned that markets move in zig-zags and an obvious question that I believe is asked is; is there a way to predict where corrections may take place?
The answer is yes. The countertrend moves operate within predictable parameters. The best know application for this is called the Fibonacci retracment.
Its important to note that there are minimum and maximum percentage parameters that are identified as 33% and 66% within any retracment. A retracement past 66% (on a closing basis) begins to favor the odds of the beginning of a trend reversal.
Below we'll see the chart for the life time of Bitcoin - note how the market has come to a stop precisely on 66%
When using the Fib tool, it’s important to know that the 38.2% level is where the majority of impulsive waves will retrace to almost always, 33% is the minimum retracement area in the event of a consolidation.
The maximum is 66%, this area is critical as it become a relatively low risk buy area during an up trend.
Hope this bit was informative for you all! If you have new requests please let me know, Thank you for reading
-- Manny