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The Simpleton's Fibonacci

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With stronger trading ranges such as GTR and DTR, I am not so much trying to pinpoint where intra-day moves are going to occur. What I am trying to do is know beforehand where STRONGER resistance and STRONGER support is going to be.

And using the same formulas and ratios I used for pre/post market (PTR) and the day’s Immediate Trading Range (ITR), I want to have these expected pivots plotted clearly in my mind.

*These calculations can be made live using our online Trading Range Calculator at http://www.kingcambo.com/rangecalculator/

So I know from these computed GTR ranges that my first three points of resistance will likely occur at 1696.69, 1717.81 and 1752.00 with Range 3 at 1786.19. Range 4 and Range 5 are too far out at the moment to contemplate immediate use of.

I also know from the above GTR ranges that my first three points of support will likely occur at 1717.81, 1696.69 and 1662.50 with Range 3 at 1628.31. Range 4 and Range 5 are, again, too far out for immediate use.

Now, since I had the necessary MSL/MSH data available by 11:01AM on 7/19/01, let’s take a look from that point forward to see what occurs:

All right now, let’s discuss these action points within the context of my GTR projections:

1. I know that the GTR Market Structure Low was established at 1662.50 on 7/18/01 (not shown above) and that the GTR Market Structure High of 1752.00 is established on 7/19/01. So I have the two necessary elements to compute GTR and establish pivots.

2. My initial projected support range pivot was 1717.81. Where does the first MSL form? It forms at 1719.00 at 12:32PM on 7/19/01. This is within one index point of my GTR1 projection. In the context of major indices, one point is a fraction, a hair if you will. If this were a dart game it would be so close to a bulls-eye as to be heartbreaking. Again, I knew this potential support information in advance, at 11:01 AM. This is the real value of understanding Trading Ranges.

3. The real Market Structure Low for 7/19/01 forms at 3:08PM at a close of 1697.00. Note from the above calculations where my GTR2 support pivot was; it was 1696.69. LESS than ½ index point from where the actual MSL comes in. To re-emphasize here, I knew this four hours earlier at 11:01AM! Armed with this information I will be looking for a bounce at a predetermined price level. Prior to this MSL, there was an expected upward resistance level (I often refer to as “MSH Congestion Zones”) projected at GTR2 also at 1717.81. At 2:42PM look where we hit the skids: 1716.50.

4. The next session, 7/20/01 opens lower and then peaks at 10:48AM at a close of 1696.00 That is the same GTR projected support pivot that formed the bottom in the prior session. Failed support now acting as current resistance, again within less then one, index point.

5. At 2:29PM the second and final Market Structure High forms for the day. This time with the exact same close of 1696.00.

This is working with GTR. Its practical value is in knowing sometimes a day, or days, in advance where congestion may form and where support may form in the current day that I am trading.

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"It takes a man a long time to learn all the lessons of all of his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most of the more technical phases of the game of stock speculation" ----from REMINISCENCES OF A STOCK OPERATOR