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13 The next weekly chart of Ebay clearly shows the power of a .618 retracement. In this case, the stock sold off sha ly from its high, losing 2/3 of its total value in approximately four months and reversed almost exactly off the .618 retracement. EBAY (EBAY): WEEKLY BULLISH .618 RETRACEMENT  240 225 2iO 195 &) •SBlgfihaftS-Com lllllllllllllllllll llilll Oct How Dec 9$ Feb rtar Apr Jun Jul Aug Oct Despite this sha decline, the stock literally bounced on the week that it hit the .618. In fact, not only did the stock bounce on the day it hit the projection, it bounced within two hours after slightly exceeding the number. After declining past the .618 retracement, which was calculated at 74 1/2, the stock estabhshed a clear reversal off this area. The stock bottomed at 70 5/16 and rallied sha ly from this low. In particular, Ebay exhibited a nice bullish continuation. Within the next six weeks, the stock doubled from
its low! I have included the following chart that clearly shows the reversal offthe .618 retracement. ebay (ebay): 15-minute action @ .618 retracement  .618® 741/2 UO 105 Uelufne ** ©8lgCli,iita,Mri  11 1 1 3F11 1 I nu I 3H11 1 3T11 1 3F11 1 3 11 1 3T11 1 3 These examples of Amazon and Ebay are truly awesome! They illustrate the significance ofthe .618. The price action in these examples provided clear signals of reversal confirmation, as it possessed convincing continuation of a new uptrend. Although these stocks seemed to be "crashing" preceding the reversal, they found excellent support at the .618 retracement and yielded fantastic rallies.
Bearish .618 Retracement A bearish .618 retracement after a strong sell-off occurs very frequently. A reversal off the bearish .618 usually indicates a continuation of the downtrend. In my opinion, if a reversal occurs at the .618, it will not exceed the area very much. In fact, if a reversal is valid at the .618, the stock "should" possess a bearish price bar after hitting this number. BEAmSH .618 RETRACEMENT SELL AT b! Reversals off the exact .618 do occur. However, it is important to study the price action in the area close to the retracement. If a stock begins to stall or break down, it would indicate that the .618 is acting as resistance. It is important to recognize these signals when the stock hits this area. The important aspect of this Fibonacci retracement is that in a bearish refracement, it is the first potential area of major resistance. So, if I am long or I am looking to short a stock that is rallying after a significant decline, I want to look specifically in the .618 area for a trade opportunity. The following examples will illustrate the bearish .618 concept.
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