Why markets reverse... blame it on Fibonacci

There are times when markets reverse for no apparent reason and seem to defy any news that would support the direction of the trend. We call the this occasional event the "Fibonacci factor." This occurs when markets reach certain retracement levels and often reverse direction from their previous trend.

In this new short video I outline this phenomenon on the S&P500 and will also be covering it when our new educational trading video debuts this Friday, which will be of course, "Fibonacci Friday".

Enjoy today's video and let us know what you think. As always there is no charge and no need to register.

All the best,

Adam Hewison
President INO.com
Co-founder of MarketClub

10 thoughts on “Why markets reverse... blame it on Fibonacci

  1. Yama,

    Market looks neutral to me as it decides next move. Probably NOT a good time to buy gold, oil, silver. Looks like there's some correcting happening.

    Watch for market rally to S and P 1150 as it's showing some bullish set-up signals. This is a relatively small move, so I wouldn't trade it heavy, but put in a few buys. But late into July and beginning of August look out!!...I see bad news at end of July.


  2. Hi Adam,

    Thanks as always for the excellent training videos.

    Your MACD looks different from the one I get on my charts using MarketClub - are you using different parameters or the default settings?


    1. Sham,

      Thank you for your feedback.

      The MACD settings that I use are as follows:

      Fast Slow Periods 1-26
      Signal Period 9

      Hope this helps.

      All the best,

  3. It seems to me everything is in a perfect SHORT scenario these days. Everything andd I mean everything seems to shout Short me short me short me and buy buy buy gold....

    Might as well follow it and place tight stops everyday...

  4. With the market being controlled by few players with lots of cash. I would not be surprised if today ends up being a bear trap and we go much higher over the next few days.
    Too easy of a head & shoulder looking setup combined with the 50% fib that seems to be convincing everybody to go short, and of course the market always does what everybody thinks!

  5. Hi Adam: I see the 61.8% retracement reached in the Dow and S&P from the 2007 high to April 2010, but my question to you is:

    What tools do I use now to determine how LOW the market(Dow and S&P) can go as it gets bearish going forward? Are the only good tools just looking at previous support levels and then drawing a line underneath that? Is Fibonacchi to be used only on the upside? Thanks for all your help.

    1. Kathy,

      Thanks for your feedback.

      I usually measure moves using a simple swing technique. I also like to let the market tell me what it wants to do.

      All the best,


  6. Hi Adam!

    I think you may be spot on with your assessment. Not only has price gotten the initial reversal from the 50% Fib level, but it has also found significant monthly pivot resistance. Moreover, the outside bar reversal from the daily candlestick also points to a potential pull-back.

    If the $SPX closes below 1,108 today or tomorrow, we could see more weakness back toward the 1,085 to 1,095 range..



  7. YEs, fibonachi works perfectly always. Sometimes we beliave it doesnt work, but if its did work, that means we read market wrong.
    Usually when market reaches fibo levels we should pay attantion on candles set up too, if candle reached a fibo level and then pulled back closing by more then 60% of its candle then more then usually market ready to reverse and go other way. It prety good works on monthly,weekly,dayly and 4h chars. By the way last video for crude oil outlined exactly the same situation. I consider it as a perfect place for entering into market after closing this candle as stop here can be very small. If we look one step lower,( from day to h4) so we may see twins candle, with perfect place to place order on the middle of the candle.

    Good luck and pay attantion to fibo levels and its reactions.


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