The Pop Parabola Strategy

Let’s zoom in and see whether there’s a Fibonacci strategy you can use to uncover low-risk openings that less observant market participants could miss. For four days, falling price has been sitting on the 38% retracement, drawing in a supply of money seeking for a turnaround. This audience is trapped by the downward gap, which is shook out when the stock hits a volatile low of 62%. While it makes sense to purchase at that support level, it’s a hazardous move because the gap may easily destroy the upside and trigger another breakdown. The next step is the most crucial. The rise over the 38% retracement re-establishes support, prompting a Fibonacci Flush buy signal, indicating that holdings at $47 would provide a consistent profit. At the same time, disgruntled stockholders are hesitant to purchase back at around this price because “once bitten, twice shy,” as the saying goes. This reduces interest in the trade whilst enabling fresh money to take risk in some kind of a lower-volatility transaction and relying on a long-observed propensity for support to hold after being tested, broken, and remounted.

The Pop Parabola Strategy

Until an instrument completes a 100% price swing, the 78.6% retracement level stood watch as the final harmonic barrier (higher or lower). This is important information since this indicates that in an uptrend, a breakout above this level, or just a breakdown in a downtrend, a breakout could continue everything the road from the last swing high or low as a minimum goal. The calculation predicts that the remaining 21.6% of the surge or sell-off wave will be free. On longer time horizons, this Parabola Pop technique can give early access to large breakouts and collapses on widely held items. Consider Meta (FB), formerly Facebook, which reached a high of $72.59 in March 2014 before entering a decline that received support in the mid-$50s. Two months later, the second recovery halted around the 78.6% retracement level of $68.75, resulting in roughly three weeks backswing movement. On July 21, the stock surged above harmonic resistance (red line), completing the last 21.4% of the 100% price swing in just four sessions. Furthermore, a breakout above the March high occurred on the fourth day, triggering a new set of buy signals that provided Fibonacci-focused owners with a variety of beneficial alternatives, including letting it ride, accepting partial profits, or putting the balance on the current upswing.

A second aspect of the Parabola Pop approach is highlighted by the Meta breakout. As though a magnet is drawing on price movement, markets continue to go vertical into one of these 100% levels. This parabolic trend might yield spectacular outcomes in a short amount of time. Of course, nothing is guaranteed in today’s markets, and anything may happen at any time, but even a tiny tilt toward the vertical signifies a distinct advantage over the competitors.

Fibonacci Retracements Have a Lot of Ussage

How to Use the Fibonacci Sequence Ratios

The Fibonacci approach is based on the idea that numbers in a series may be used to create ratios. The natural proportions of both the objects accessible on the earth’s surface may be described using the ratios generated by the integers. The series has numbers ranging from zero to infinity. The following formulas are used to calculate the ratios:

1. To make the third number, you add two consecutive numerals. You combine to get one if you start with zero. The number one was then added to the number two to make three. When you put these numbers together, you’ll get a sequence of 0, 1, 2, 3, 5, 8, 2.

2. Find the final digit’s ratio over the second last digit. The golden ratio, which is 1.618, may be found in a variety of natural items. Traders utilize the golden ratio to figure out where the retracement and extension levels are.

3. The profit-taking levels are the retracement and extension levels. Those would be the levels at which traders place their buy and sell orders. When prices are high, Fibonacci retracement levels travel in one direction prior to actually retracing.

Fibonacci Retracements Have a Lot of Benefits