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CO L UMN • •
Graph 1. Fibonacci Retracement SOURCE: COMPILED BY AUTHOR
Graph 2. Fibonacci Projections SOURCE: COMPILED BY AUTHOR
F – Point H). This indicates that
market prices are inclined to move
in the vicinity of Fibonacci-levels.
Possible support and resistance
levels can therefore be determined.
In a case where an initial trend
(high and low) was determined,
with prices making corrections, it
is possible to determine support
or resistance levels (projections)
for a continuation of the initial
trend. Graph 2 illustrates an initial
downward trend, after which a
temporary correction took place.
By using Fibonacci it was possible
to ascertain that possible sup
port could be found at 23.6%,
after which 38.2%, 61.8%, etc.
should act as support should the
above-mentioned levels not hold.
Point A – Point C (Fibonacci-
levels 23.6%, 38.2% and 61.8%)
in Graph 2 reflect prices which
were supported initially, but it
could not be sustained. Prices
found final support at Point D
(Fibonacci-level 161.8%). In this
case prices form a new significant
level and the Fibonacci-analysis
is adjusted in order to determine
more accurate Fibonacci-levels.
CONCLUSION
By merely having a reasonable
understanding of the above infor
mation, you will be a step ahead
of the rest. However, it will be
most beneficial to combine tech
nical analysis with fundamental
analysis in order to make the best
possible decision. When the lon
ger term support or resistance line
is broken, it can usually be linked
to fundamentally changing supply
and demand factors.
Technical price graphs offer
analysts the opportunity of visual
ly representing the ratio between
supply and demand and possible
changes in the ratio can be indi
cated by various price formations.
With support and resistance lines
as basis, various formations exist,
which can be analysed to generate
possible buying and selling signals.
Future articles will focus on the
interpretation of various forma
tions and technical indicators.
For more information or to
obtain competitive option prices
on a large variety of commodities,
please contact Susari Geldenhuys
at 018 464 7430 or 072 116
9999 or e-mail her at Susari.
[email protected].
SENWES Scenario • JUN/JUL 2017
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