TEXACO (TX); WEEKLY BULLISH 1.27 PROJECTION

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Not only did Texaco bounce on the week it hit the 1.27 projection, it reversed on the exact day. I have included an enlarged daily chart to illustrate the price action at the 1.27 projection. As you can see, Texaco literally bounced off this area, and the stock provided clear bullish signals to

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confirm the reversal. Although the stock formed a bearish price bar on the day it hit the 1.27, the following three days signaled a new uptrend. The gap up on the open on the third day was overwhelming evidence of this new bullish trend.

TEXACO (TX): DAILY

ACTION IN THE POTENTIAL IRVERSAL ZONE

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It is important to note that when a stock does reverse almost exactly off a Fibonacci projection, the price action can be strong. In this case, Texaco rallied almost 25 points in the following few months.

The next chart is another great example of the 1.27, acting as support. JC Penney reversed within a point, after exceeding the projection. The 1.27 was calculated at 36 9/16. The stock hit 35 3/8 and reversed.

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JC PENNEY (JCP); WEEKLY BULLISH L27 PROJECTION

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The next enlarged daily chart shows how JC Penney found significant support at this 1.27 projection. After moving sideways for several days, the stock provided clear signals of a new uptrend. As you can see, the stock found excellent support at the 1.27 projection. Since the stock possessed a bearish price bar on the day it hit the projection, you might have waited for some clear reversal signals. Four days after hitting this area, the stock rallied strongly.