Fibonacci retracement levels often reveal hidden support and resistance levels in stock charts such as the support level at the CIE weekly stock chart.
Obviously traders didn’t need to depend on Fibonacci retracement, since the support level wasn’t hidden at all. Cobalt International Energy stock completed a pullback after the 12-month uptrend, which sent the stock price from $7 to $36! Shares plunged to $20 during the pullback that followed and found considerable support, confirming the key level twice until today. The 50% Fibonacci retracement level is the third most important retracement level as 61.8% and 38.2% levels are the most crucial levels in Fibonacci trading.
Let’s take a closer look at the daily CIE stock chart that provides a more detailed view of what’s happening in CIE stock lately.
Moving from a longer time frame to a shorter one is a common practice in stock trading. Many trading experts agree that in order to learn how to trade stocks, traders should pay attention to the bigger picture available to long term time frame charts. If a key Fibonacci retracement level is found at that chart, our odds are much improved to trade profitably in short term time frame charts.
The trading range is quite clear at the daily CIE stock chart. A sound trading strategy would be to buy CIE stock at the support level of that range and hope for an uptrend’s resume in the following weeks. Waiting for a candlestick bullish pattern is recommended but not necessary if you want to enter at the lowest price available. At this time such a pattern does exist in the daily candlestick chart, completed by Monday’s inverted hammer and yesterday’s gaining candlestick.
I have pointed out Fibonacci retracement levels in stock charts before, like the Seagate monthly stock chart. Fibonacci trading also includes Fibonacci extensions, which worked well in the case of a penny stock chart (RAD). I strongly believe that studying about Fibonacci retracement levels would make a difference when learning how to trade stocks.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CIE over the next 48 hours.