In today's post we take note of the fact that since bottoming out in 2009, the corrective rallied have not exceeded the 38.2% Fibo retracement. Let us look at the details -
- 2009 low - 2010 high (blue) - correction ended near 38.2% Fibo
- 2009 low - 2011 high (black) - correction ended at 38.2% Fibo
- 2011 low - 2015 high (pink) - correction ended at 38.2% Fibo
- 2009 low - 2015 high (green) - correction ended around 23.6% Fibo
In each of these cases, prices bottomed out at 38.2% Fibo, except in the last case where prices briefly dipped below 23.6% Fibo and quickly recovered.
Also note in the first three cases, prices rebounded from 38.2% Fibo and went on to breach the top in the first attempt itself. Only this time (last case) prices have witnessed rebounded twice from 23.6% Fibo, but failed to take out the top. This may be because the correction ended at 23.6% Fibo.
Let us see if the index manages to take out 2015 high. Traders should note that a fresh corrective rally could target 23.6% Fibo or 38.2% Fibo. Scope for rebound exists as long as 38.2% Fibo isn't breached on monthly closing basis.