EURUSD--Friday Morning, June 19, 2009
An update on yesterday's EURUSD post, which looked at this extended Fibonacci pattern:
And then looking at the retracement--so far--of the extended move (from beta to the 2.618 extended target);
On a 1 hour chart, the pattern of the retracement becomes clearer:
As can be seen, the high yesterday (building into the London close) was near the 48.6%--or roughly 50%-- retracement level. (And in this case "near," means within a pip.) After that there was a sell-off which ended near the 23.6% retracement level.
The other pattern to notice is how the market yesterday seemed to oscillate around the 38.2% level before that push and subsequent failure at the 48.6% level. Today that 38.2% level is currently providing resistance.
A note on the 48.6% Fibonacci level:
People often speak of a 50% retracement, but there really is no obvious way the 50% level can be related to Fibonacci ratios. However 0.486 is the square root of 0.236, which is clearly a Fibonacci ratio. Something which should be understood about the Fibonacci system is that--in describing patterns of growth and decay--it is not static, but directional. A pattern unfolds in one direction or the other and, while the 0.382 and 0.618 levels display a symmetry, other levels do not.