An important Fibonacci retracement in the Dow

After the Dow Jones put in a sharp rally last week, it is displaying a textbook example of how markets often obey Fibonacci theory. John C Burford explains.

I last left the Dow on Wednesday in a state of indecision. The market had broken below my lower tramline drawn off the lows made since the 8 August low at 10,450. But it had not made a decisive break down to my pencilled-in fifth wave low below 10,450.

As I explained, I could not have confidence that the market was fully ready to resume the bear trend right away. The market was swinging around the tramline with no clear trend (at least in the short term).

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John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.