Fibonacci is a Fan of the S&P 500

The weekly chart of the S&P 500 below shows the price action over the last 2 years. Following the move higher from the October 2011 lows to the April 2012 highs it pulled back and is now riding the middle trend line higher. But that line goes back to the October 2011 low, what is it? A Fibonacci Fan line. These Fans are drawn by creating lines from the previous low rising up through the point where the key Fibonacci levels, 38.2%, 50% and 61.8% meet the vertical line dropped from the previous high (in blue here). These measure the extent of the pullback in terms of how fast it is

moving, so are also known as Speed Lines. They are important because they can often act as support or a reversal point. In this case the 50% Fan Line has been good support with only a brief one candle dip below it that was immediately erased the next week. I have attached a link to a good article on Stockcharts.com below if you want to learn more details about Fan Lines.

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From Stockcharts.com: Fibonacci Fans

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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