If you’re familiar with our analysis, you’ve probably noticed that Fibonacci Extensions and Retracements play a vital role in our process.
From setting upside objectives to identifying areas of potential support and resistance, Fibonacci is a versatile tool.
As with any tool, there are times when it works better than others. And while we don’t want to get into every intricate detail of how and where we use it, we did want to share a great example of Fibonacci in action.
Titan Company Ltd. has been one of our favorite stocks on the long side, with Fibonacci Extensions of its 2015-2016 consolidation being a great guide for the trend along the way. Recently prices met our upside objective at 1,330, which was where the 685.4% extension of the 2015-2016 base and the 261.8% extension of the 2018 base coincided.
Click on chart to enlarge view.
Prices had been extended for a long time and momentum had diverged significantly all throughout this trend, but by running into this area of resistance at 1,330 there was finally a catalyst for sellers to take control…and they did in a big way.
Fibonacci is just one piece of our weight of the evidence process, but when it lines up with other data that supports the same thesis, that’s when you see moves like this.
Thanks for reading and let us know if you have any questions!