# 200 DMA Fib Retracement



## SGB (28 April 2009)

The 200 day moving average or 200DMA is probably the most used moving average indicators used for the longer term position prespective.

As shown in the TOLL example along with the Fibonaci retracement tool, a blend of support and resistant points, the 200 DMA can really give a guide to what is happening with a stock price movement with the added advantage of entry and exit points with the Fib.

Toll began its bull surge back in the beginning of 2003 and as you can see confirmed this with plenty of support every time it came into contact with the 200 DMA between 2005-2006 and then ran away for another year after April 2006. Its interesting to note back in the beginning of 2006 it ran down hard but came racing back after it hit the 78.6% or $5.84 and broke through the 200 DMA once again.

It confirmed its breakdown in 2008 crossing down the 200DMA and also the 23.6% fib or $12.63 and continued down without even challenging the 200DMA for up to15 months  until now.

OK… I can hear the fundys saying yer but that was a bull market back then and oil did hit $150 BUCKS to cause the price to spiral out of control, but the point of this exercise is for chart pattern recognition without to much noise.

So where to now?

As you can see now it’s finally hit the 200DMA with a lot of selling resistant pressure. But the interesting dilemma is it is also caught at the 78.6% Fib support line.

My interpretation would not to be trading this and to see which way it will go because if it hit heads down and breaks through the 78.6% support line the new lows will be tested very quickly. It’s even risky for a short play at this stage .On the other hand if it spikes up through the 200 DMA there is a good chance of a trend reversal.

Anyways, I thought I would share this with you and another tool to throw into the traders toolbox.

SGB


----------



## SGB (5 May 2009)

TOL has found strengthening support at the 78.6% fib area and now finds itself back on the cusp of the 200DMA. Its generally a good sign for advancement in price action.

Would not be supprised if it moved forward from this position to the next fib ressissant level at 61.8% or $7.91 but first would like the 200DMA to be prominent in its support. The next couple of days should give a clearer indication.


----------



## beamstas (5 May 2009)

200 Day Moving Average is quite a long term average
I tend to look at around 50 days just to give a lay of the land in terms of the current trend

Could you explain to me the reason behind why 200DMA would provide support? Is it because alot of people will use the 200DMA as a filter and thus buy more when the price is sitting above it? Or is there another reason why the 200DMA could be useful for trading? I look forward to any insight you can give me 

Cheers
Brad


----------



## SGB (5 May 2009)

Heres another good example with NCM.

After it brokedown through the 200 DMA in April 2008, while being above it for many months, it struggled to advance on 2 occasions not only at the 200DMA but also at the 23.6% Fib ressistant  level as well, for double strength, and finally found support again at the 61.8% level.

After the breakthrough, on the third attempt, is now holding some strength which is  displayed  with support coming in on 2 occasions when the 200 DMA was touched.

Interesting to see if it does advance through the 23.6% Fib level in the coming days

SGB


----------



## SGB (5 May 2009)

beamstas said:


> 200 Day Moving Average is quite a long term average
> I tend to look at around 50 days just to give a lay of the land in terms of the current trend
> 
> Could you explain to me the reason behind why 200DMA would provide support? Is it because alot of people will use the 200DMA as a filter and thus buy more when the price is sitting above it? Or is there another reason why the 200DMA could be useful for trading? I look forward to any insight you can give me
> ...




Hey Brad

I use the 200DMA along with the fib in my strategy when trading to scan for possible support, ressistant and trend for the shorter term. Have found this to be quite successfull. Just how I trade. 

When the price breaks up or down through the 200DMA it gives areas of interest, to buy long or sell short and combined with the fib levels gives me targets on exits, and stops after I have made a trade. Every trade has an exit point. 

Being a traders market at the moment for short term entries and exits it gives me a clearer direction on the bigger picture.

I hope this helps.

SGB


----------



## tech/a (5 May 2009)

A 200 day simple M/A is simply an addition of closing prices / by periods.(200)
The first dropped off and the newest added on each day.
To think that it has some magical ability to support or resist price is in my view delusional.

Same with fibs.
They don't supply an external reasoning to act as support or resistance.
They are at levels which historically participants see price as good buying dependant upon the velocity of the trend.
Stronger the trend the less a stock will pull back during it.

Do you seriously think fund managers or the big players in the market place orders because a stock is trading AT its 200 SMA.

If it/they were doing something external----price would turn EVERYTIME at these levels. It doesn't.

They are INDICATORS nothing more.
There is nothing magical about technical analysis.Those who think it is magical will be bitterly disappointed and find it near impossible to apply it successfully to profit in the market.

By the way that's all I trade and have traded for 15yrs.


----------



## beamstas (5 May 2009)

tech/a said:


> There is nothing magical about technical analysis.Those who think it is magical will be bitterly disappointed and find it near impossible to apply it successfully to profit in the market.




You are wrong!
I use a 36 day moving average to trade
Look at how the market reacts every time it touches the 36 day moving average!!!


----------



## SGB (5 May 2009)

tech/a said:


> A 200 day simple M/A is simply an addition of closing prices / by periods.(200)
> The first dropped off and the newest added on each day.
> To think that it has some magical ability to support or resist price is in my view delusional.
> 
> ...




Yep nice call tech,

Its good to see some professionals come in and get this thread rolling. I was starting to feel isolated.

SGB


----------



## tech/a (5 May 2009)

> You are wrong!
> I use a 36 day moving average to trade
> Look at how the market reacts every time it touches the 36 day moving average!!!




Busted!

*SGB.*
Plenty of us here.

Mind you there is a comon train of thought that a stock or index trading above its 150Day M/A should be looked at for long trades and below for short.
Stan Weinstien first introduced.


----------



## SGB (5 May 2009)

tech/a said:


> Busted!
> 
> *SGB.*
> Plenty of us here.
> ...




It really doesn't matter what strategy or indicators you use though, wether its MA's, RSI,* EW * T/As, fundys and so on. Take a pick... theres thousands.., plenty of books to fill in the void for active learning. 

But I do beleive you have to find your own niche or style to suit yourself. If its working for you, why change.. theres no need to fix it if its not broken. Your style probably wouldn't suit me. Are you right... I am wrong.. It really doen't matter. I still respect your opinion.:alcohol::alcohol:

The point of the thread was to look for chart pattern similarities, something traders have done for decades. I hope you agree on that one.

SGB


----------



## sammy84 (5 May 2009)

tech/a said:


> Busted!
> 
> *SGB.*
> Plenty of us here.
> ...




I read this previously aswell, however felt that 150 days is a long time, and as a result during this time you can miss the beginning of some explosive rallies.  Therefore I have adjusted my moving average to average hold time, which is around 50 days, and use that as a decider for long or shorts. What are your thoughts on this line of reasoning tech?


----------



## tech/a (5 May 2009)

*SGB*

I'm not trying to be "Right"
Just pointing out that this *really isnt *an edge!
We want an edge dont we?

My caveat is that i'm probably way way shorter timeframe trading than you.So I obviously look at it from my view. And yes if your happy---fine.

*Sammy.*

For short quick moves anything other than Price and volume Wont do it.
Anything that oscillates is made up of past history over X periods.
Price and volume are Now.
And what they did a few days earlier can give you a good "Edge"

You cant trade a move like the one below with oscillators 
This netted 12% in a few days out today at 69c and without instant knowledge would still be in.

Click to expand its a 60 min chart!


----------



## SGB (7 May 2009)

SGB said:


> Would not be supprised if it moved forward from this position to the next fib ressissant level at 61.8% or $7.91 but first would like the 200DMA to be prominent in its support. The next couple of days should give a clearer indication.


----------



## beamstas (7 May 2009)

Mate

The price has ignored the 200 day moving average countless times, randomly touched it once and it confirms that it is useful for trading?

_co·in·ci·dence (k-ns-dns, -dns)_
n.
1. The state or fact of occupying the same relative position or area in space.
2. A sequence of events that although accidental seems to have been planned or arranged.


----------



## sammy84 (7 May 2009)

tech/a said:


> For short quick moves anything other than Price and volume Wont do it.
> Anything that oscillates is made up of past history over X periods.
> Price and volume are Now.
> And what they did a few days earlier can give you a good "Edge"




Thanks tech, I have been feeling for a while I need to more dynamic in my overall market outlook.


----------



## tech/a (7 May 2009)

> Would not be supprised if it moved forward from this position




Nor would I but it has nothing to do with the MA.
The flatness of the M/A actually has more to do with it than its position relative to resistance.

The high of today is at old resistance once more.
But had you taken the trade you are in a nice position.
Will watch with interest.


----------



## weird (7 May 2009)

Power of Squares. 

Roll up, roll up ...

Marvel at how it accurately shows support and resistance points on MQG.




Wonder how it accurately shows support and resistance points for NCM.


----------



## SGB (7 May 2009)

beamstas said:


> Mate
> 
> The price has ignored the 200 day moving average countless times, randomly touched it once and it confirms that it is useful for trading?
> 
> ...




beamstas

Thanks for the vocab. I appreciate your concern in teaching us your articulate way of communicating.


----------



## beamstas (7 May 2009)

SGB said:


> beamstas
> 
> Thanks for the vocab. I appreciate your concern in teaching us your articulate way of communicating.




Im just joking


----------



## SGB (7 May 2009)

tech/a said:


> The high of today is at old resistance once more.




Based on??


----------



## tech/a (7 May 2009)

SGB said:


> Based on??




Click to enlarge


----------



## beamstas (7 May 2009)

tech/a said:


> Click to enlarge




Tech/A
I don't know what has gotten into you
You are flippin crazy!

Obviously it is the 300day MA on the weekly chart giving resistance

Bloody hell back to school for you


----------



## tech/a (8 May 2009)

Good heavens!!!


----------

