back start next[start] [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [ 17 ] [18] [19] [20] [21] [22] [23] [24] [25] [26] [27] [28] [29] [30] [31] [32] [33] [34] [35] [36] [37] [38] [39] [40] [41] [42] [43] [44] [45] [46] [47] [48] [49] [50] [51] [52] [53] [54] [55] [56] [57] [58] [59] [60] [61] [62] [63] [64] [65] [66] [67] [68] [69] [70] [71] [72] [73] [74] [75] [76] [77] [78] [79] [80] [81] [82] [83] [84] [85] [86] [87] [88] [89] [90] [91] [92] [93] [94] [95] 17 0.786 RetracementThe .786 retracement is the square root of the .618. The .786 retracement is the next critical area to examine, after the .618 has been clearly violated. The .786 is a vital Fibonacci number because it is often the "last chance reversal area" before retesting the original price point. Price action that does not reverse off the .786 usually will retest, and often break past the original starting point. Therefore, .786 failures are significant because the stop loss limit will be clearly defined by the original starting point and relatively small in comparison to the potential reversal.The .786 retracement is fairly unknown in the industry, although I believe that more technicians are becoming aware of its significance. In my opinion, it is a crucial Fibonacci number, as it accurately determines a stocks trend, based upon the price action at the number.Another reason the .786 is a valuable Fibonacci number is because it can often gauge potential opportunities, especially when the surrounding "market noise (information)" suggests that the set-up is to be avoided. I have observed many situations, where the information in the media is quite contrary to what the price action at the .786 is indicating. If a stock is trending strongly, the .786 projection frequently can serve as a key reversal point, despite such contrary information. The following illustrations and examples will elucidate this concept.Bullish .786 RetracementWhen a stock is selling off after a rally, the .786 retracement often acts as important support. If a stock declines past the .786 retracement, it will usually retest the original starting point (pt. X) of that prior rally. Lets look at the illustration.bullish .786 retracement buy at b!The following examples will demonstrate the significance of the .786 retracement as important support in stocks that are selling offThe first example is a daily chart of the Dow Industrials that is a great example of the .786 gauging extreme market action. Clearly, the Dow Industrials found support at the .786 from the prior years panic low. The .786 was projected at approximately 7460 and the low for the Dow during this decline was approximately 7400. The Dow made several attempts to sell past this low point but the .786 support held together.The Dow proceeded to rally 2500 points within the next six months! Although the newspaper headlines were extremely bearish at this time, the stock market made a significant bottom in the beginning of October, and it proved to be a very good time to be committing money to the market.DOW JONES INDUSTRIALS: DAILY.786 BULLISH RETRACEMEN©Big,Charts.comfiSOND98FnfiriJJflS0ND99FI1I have included an enlarged chart of the Dow Industrials to show the price action at the .618 and the .786 retracements. As you study this, it is important to notice how the Industrials acted after they hit these retracements. In the case of the .618, projected at approximately 7890, the Dow Industrials continued to decline in the days after it hit this price level. As for the .786, the Dow Industrials clearly found support.[start] [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [ 17 ] [18] [19] [20] [21] [22] [23] [24] [25] [26] [27] [28] [29] [30] [31] [32] [33] [34] [35] [36] [37] [38] [39] [40] [41] [42] [43] [44] [45] [46] [47] [48] [49] [50] [51] [52] [53] [54] [55] [56] [57] [58] [59] [60] [61] [62] [63] [64] [65] [66] [67] [68] [69] [70] [71] [72] [73] [74] [75] [76] [77] [78] [79] [80] [81] [82] [83] [84] [85] [86] [87] [88] [89] [90] [91] [92] [93] [94] [95]