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Yesterday, TSLA sealed up its price gap after months of effort, and today the momentum continues as it approaches not one but four resistance objects: three of them being various Fibonacci retracement levels, all clustered tightly together, and the fourth being the descending trendline.
The hour before the open was ridiculous. It went like this:
Fibonaccis are cool, but they only seem to work with a handful of financial instruments. It tends to be a hit-and-miss game to figure out which these are. In my estimation, one of the most “obedient” financial instruments with respect to Fibonacci Retracements is the IYR, the real estate ETF. We have seen these lines provide potent levels of support and resistance for literally years at this point. The most recent occurred on Friday, when it blasted right up to its 78.6% level, which it hasn’t visited in 27 months (!).
A few days ago, I wrote about the remarkable Fibonacci levels that had been defined around the SPY. I noticed that this morning’s low perfectly tagged the 78.6% level (which, last week, acted as resistance for a couple of days).
My view is that important resistance at the gap, represented by the red arrow, will not be breached. The key at this point, clearly, is to get back to the other side of that Fib level so we can start the march toward 503.97, the next Fib down, and a healthy 300 /ES handles away.
A tip o’ the paw to premium member pduncanj, who was kind enough to point out something to us that I hadn’t realized: today’s SPY peak matched with astonishing perfection the Fibonacci retracement (78.6%) going all the way back to the Halloween bottom. Here’s the daily chart:
