Here’s a historical Fibonnacci chart from 2001-2002 period…notice how the Dow recovered from a deep low in Sept 2001 with a major rally, similar to the one we saw start in March 2009. The Dow made it all the way above the Fib 62 line, then collapsed back into the Fib channel.
If it had held the Fib channel, the second lower low in 2002 might not have occurred…but the economic conditions in 2002 were so miserable, that the Dow snapped thru the 38.2 support line…and that set it up for the crash below the zero line….and on to a new low.
That’s why it’s important to watch how the Dow handles this major Fib channel in 2010…so far, it’s managed to stay above the 38.2 support…barely! PLEASE CLICK LINK BELOW:
CURRENTLY, as the major fib channel shows, the Dow is still trading sideways thru the channel and trying to mount a rally…for those who believe in the Fibs (I only believe in them to the extent that the Bots may trade them!)…the next resistance is the 50% line which lies about 10,334. That point is also very close to the Death Cross, which from my experience is often a target itself on bounces after a Death Cross occurrence. PLEASE CLICK LINK BELOW