Senwes Scenario June / July 2017 - Page 43

••• • • 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. Geldenhuys@senwes.co.za. SENWES Scenario • JUN/JUL 2017 41