On Friday, the US30 index CFD completed an ABCD Fibonacci pattern, setting up the market for a retracement of the break from Point C to Point D. With the main trend down, this will be a counter-trend move which could payoff if aggressive buyers shift the momentum to the upside.

The overall quality of the Fibonacci pattern is an average 5-bars. Time symmetry and clarity are also rated 5-bars. The time symmetry rating suggests that the time relationship between Point A to Point B and Point C to Point D is average. The clarity quality indicator measures the amount of market noise. Its 5-bar rating means that the number of price gaps and price spikes are average. The 4-bar price symmetry rating suggests that the Fibonacci relationship between the price break from Point A to Point B compared to the price break from Point C to Point D is slightly below average.

The ABCD Fibonacci pattern is called the “backbone” of all Fibonacci patterns. This is because it is contained in all other Fibonacci patterns. It is easy to identify because of its lightening bolt pattern. With the US30 topping at Point C or 13225 then breaking to Point D or 13001, traders should be anticipating a rally into the Fibonacci levels ranging from 13086.56 to 13363.44. A typical retracement reaches the 50 percent to 61.8 percent levels at 13113 to 13139.44 respectively. The short-term trading action immediately after reaching Point D has already retraced 50 percent. Since momentum appears to be building toward the upside, traders should watch for a test of the 61.8 percent level on Monday. At this point, they must be able to read the momentum to determine whether the market is going to continue higher or reverse back down.

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The UK100 index CFD has formed an emerging ABCD Fibonacci pattern on the 1440-minute chart, setting up a potential rally into the Autochartist price level target at 6054.30. If the market does reach this price and time target, then traders should watch for a correction into a series of Fibonacci price levels, ranging from 5930.62 to 5530.38.

The ABCD Fibonacci pattern is called the “backbone” of all Fibonacci patterns. It is easily recognized by its distinctive “lightening bolt” pattern. This pattern is also a symmetrical pattern, meaning that the expected rally from Point C to Point D, or the target, is based on the rally from Point A to Point B. If the market balances price and time as expected at the target price, then traders should look for a corrective break ranging from 38.2 to 1.618 percent of the rally from Point C to Point D.

The rally from Point A or 5622.79 to Point B or 5976.59 is 323.80 points. If you add this amount to the bottom at Point C or 5730.50, the target price becomes 6054.30. If the target price is reached, longs may decide to take profits or counter-trend traders may decide to play the short side of the market with limited risk. If the index CFD corrects into the Fibonacci levels as expected then trend traders should look for another buying opportunity if a bottom sets up properly and there is an identifiable exit price.

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The USTEC completed a 3-Point Extension Fibonacci pattern on the close on Friday, setting up the market for a retracement into a series of Fibonacci price levels ranging from 2643.25 to 2617.55. Since the main trend is up, the move to the downside is expected to be corrective in nature rather than trend changing.

The 3-Point Extension Fibonacci pattern is one of six Fibonacci patterns identified by Autochartist. It can also be described as being a member of the second level of Fibonacci patterns. The first level is the simple ABCD pattern and the third level is comprised of the more complex Gartley and Butterfly patterns. It is also categorized as a symmetrical pattern. This means that the move from Point B to Point C is related to the move from Point A to Point B by a precise price and time relationship.

The break from Point A or 2643.25 to Point B or 2630.40 is 12.85 points. Multiplying 12.85 by the Fibonacci ratio of 1.618 yields 20.80. If you add 20.80 to Point B, you get Point C or 2651.20. Since the index CFD sold off after reaching this level, this may become key resistance. Now that the market has started to turn down, traders can anticipate a break into the series of Fibonacci price levels. Since the main trend is up, trend traders should watch for the next buying opportunity following a test of these levels especially the 50 to 61.8 percent retracement levels.

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The strong late session rally in the E-mini Dow ($5) Futures market was impressive because it demonstrated that despite the low volume, investors were still buying dips in stock index markets. Although the contract still has a little work to do before mounting a challenge of the Autochartist Key Levels resistance level at 13024.95, there appeared to be enough momentum on the close to drive the market higher on Monday.

Supporting the idea of a higher market early next week is the triangle chart pattern on the 30-minute chart which is forecasting an emerging rally into a downtrending resistance line near 12995.04. Both charts share the same support level, but the key levels chart has identified horizontal resistance while the chart pattern has recognized resistance as a diagonal line.

The strong close in the E-mini Dow futures market has put the average in a position to breakout through the 12995.04 downtrending resistance line early in the trading session. The key levels chart is indicating this is likely because this chart shows there is room to the upside. Should upside momentum continue with above average volume, then traders should look for a breakout above resistance created by the triangle chart pattern for a possible rally into the key levels resistance level at 13024.95. A test of this price level will also mean that traders will have to decide whether to take profits at this level or to play for another upside breakout.

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After the France 40 (F40) index CFD formed Point C on the 240-minute chart, Autochartist was able to identify an ABCD Fibonacci pattern. Based on information derived from the chart, the Fibonacci pattern suggests that the market is set up for a possible break into the price and time target at 3424.20.

The ABCD Fibonacci pattern is considered the backbone of all Fibonacci patterns. This is because its signature “lightening bolt” pattern is contained in all other Fibonacci patterns including the Gartley and Butterfly Fibonacci patterns. The ABCD is a precision pattern based on the key elements of price and time. For example, in order to forecast the break from Point C to Point D, or the target, traders use the move from Point A to Point B and move it forward after completing a short-term rally from Point B to Point C.

The break from Point A to Point B has been identified as 3485.63 to 3435.03, or 50.60. Subtracting 50.60 from Point C, or 3474.80, predicts the target, or Point D at 3424.20. Traders should also note that the rally from Point B, or 3435.03 to Point C, or 3474.80 was 39.77. This is equal to 78.6 percent of the decline from 3485.63 to 3435.03.

If the France 40 index CFD reaches the target price as forecast, traders should watch for the start of a rally into a series of Fibonacci levels ranging from 3443.53 to 3506.07. Most of the rallies stop between 50 percent and 61.8 percent, but since the previous rally was 78.6 percent, traders can anticipate a possible retracement to 3463.98. While this is a valid forecast, it should be noted that a trade through 3474.80 will negate the pattern.

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The USTEC index CFD opens the week in a strong position to challenge the Autochartist Key Levels resistance at 2594.70. This price level had rejected the market several times over the past two days; the most recent test was following a tremendous rally from near 2543.70.

The first penetration of this price level was on February 15, following a short-term retracement to 2581.00. At that time the move into resistance was almost vertical, most likely putting the market into an overbought position. The subsequent sell-off dropped the market to nearly 2541.00 within a short period of time, suggesting a massive liquidation was taking place. The amount of selling pressure as judged by the size of the candlesticks, clearly established the importance of this key level resistance.

Quickly reaching an oversold bias, the USTEC index CFD formed a small support base before launching another attempt to breakout over the key resistance level at 2594.70. Once again the index CFD ran into solid resistance, triggering a short-term break into 2575.20. Although this type of topping formation typically starts a 50 percent correction of the previous range, buyers stepped up early to turn the market back in the direction of the resistance level.

The challenge for traders at this time is to determine whether the recent tests of resistance have weakened this area enough to warrant a breakout move to the upside. Momentum and better than average volume will also be clues that strong buyers have returned. Volatility may increase but it will not necessarily mean an impending breakout. Decreasing volume on a rally usually indicates a top is forming.

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After a 38-candlestick rally inside of a rising wedge chart pattern on the 240-minute chart, the Nikkei 225 index broke through the steep support line, setting up a potential break into the forecast price zone identified as 8806.94 to 8614.43. With all breakout trades, above average volume as well as rising volatility will be necessary to help the market reach its objective within the allotted time period.

The overall quality of the chart pattern is an average 5-bars. The initial trend is 4-bars. This means that the strength of the trend prior to the chart pattern’s formation was below average. In addition, the initial trend was down as well as the breakout, leading Autochartist to identify the trend change as a continuation. The 6-bar uniformity rating could be indicating that the strength of the support and resistance levels is slightly above average. Finally, the clarity indicator which measures the presence of “market noise” is rated 4-bars. This suggests that the amount of “market gaps” and “market spikes” is slightly below average.

The rising wedge chart pattern is a trending pattern. It is a combination of the channel up and triangle chart patterns. The “squeezing” of the support and resistance lines creates a tight trading range, indicating building volatility. This proved to be true based on the Autochartist breakout indicator rating of the maximum 10-bars. The solid breakout through support appears to have the index well on its way to the forecast price zone. All it is going to take is rising volume and volatility to solidify the market’s chances of reaching its downside target within the expected time period.

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It took a while, but the UK100 index CFD finally reached its October top near 5833.00 after several months of tumultuous trading activity. Powerful short-term momentum drove the market up to the resistance level of an ascending triangle chart pattern on the 1440-minute chart, putting the market in a position to breakout to the upside. The initial trend is up as well as the projected direction of the next move. Based on this set-up, Autochartist has determined that this chart pattern is poised for a continuation trend change.

The overall quality of this chart pattern is rated a slightly below average 4-bars. The initial trend is a weak 3-bars. This quality indicator measures the strength of the trend prior to the chart pattern’s formation. The uniformity indicator searches for equidistant tops and bottoms as well as measuring the number of successful tests of support and resistance. Autochartist has determined that this is rated an average 5-bars. The clarity rating is also a below-average 3-bars. This may be because of the presence of “market noise” in the form of “gaps” and “spikes”.

The ascending triangle chart pattern is categorized as a non-trending chart pattern and often indicates the presence of impending volatility. The gradual narrowing of the space between the horizontal resistance level and the diagonal support levels often bottles up traders while creating the perfect environment for a breakout. The size of the next to last candlestick suggests that the market is ready to make its move to the upside. Momentum traders should be preparing for an upside breakout through resistance that should complete the pattern and set up the market into an Autochartist price forecast zone.

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The E-mini S&P 500 futures contract has formed a potentially bearish ABCD Fibonacci pattern on the 30-minute chart. Now that the market has retraced the break from Point A to Point B to form Point C, it is set up to break into the Target Price, or Point D. Following a successful test of this potential support level, Autochartist is forecasting a possible retracement into a series of Fibonacci retracement levels ranging from 1308.75 to 1323.50.

The ABCD Fibonacci pattern is called the “backbone” of all Fibonacci chart patterns. This is because some form of it is contained in all Fibonacci patterns. This pattern is also price and time symmetrical. This means that the move from Point C to the Target Price or Point C is symmetrical to the break from Point A to Point B.

The top at Point A is 1319.25. Point B is 1307.25. The range of the break from 1319.75 to 1307.25 is 12.00 point in 6 candlesticks. Since Point C is 1316.25, a 12.00 point break would make the target price 1304.25. If the market reaches the price and time target as forecast, then traders should watch for a potential reversal back to the upside.

Because of the two-sided nature of this Fibonacci pattern, it can be attractive to short and long traders. Now that Point C has been identified as a top, bearish trend traders may want to short the market looking for a break into the Target Price. A trade through 1316.25 will negate the pattern. Counter-trend traders may want to explore the long side of the market if the E-mini S&P 500 futures contract successfully tests the Target Price at 1304.25. The objective of this trade will be any of the Fibonacci retracement level with the 50 and 61.8 percent price levels at 1310.00 to 1311.50 respectively the most likely upside targets.

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USTEC index CFD rebounded after forming Point C of an ABCD Fibonacci pattern, setting up a potential rally into the forecast price level at 2440.50. If this price level is reached within the forecasted time frame, the index CFD is expected to start a correction into a series of Fibonacci price levels between 2435.99 and 2421.41.

The ABCD Fibonacci pattern which is referred to as the “lightening bolt” pattern is also known as the backbone of all Fibonacci patterns. It is also created by price and time symmetry. This means that the forecasted rally from Point C to Point D (Target) is related to the actual rally from Point A to Point B in terms of price and time. Because of its two-sided nature, this pattern is appealing to both long and short traders.

The rally from Point A, or 2425.50 to Point B, or 2437.30 is equal to 11.80 points in nine candlesticks. Adding this number to Point C, or 2428.70 produces a forecast of 2440.50 in nine 30-minute candlesticks. The break from Point B, or 2437.30 to Point C, or 2428.70 is projected to trigger a move to 2431.90 in 3 candlesticks. Besides the swing chart projection, a series of Fibonacci levels are also potential targets. Typically, a market will correct at least 50 to 61.8 percent of the previous rally, but a break of 78.6 percent will put the market at 2431.22 which is close to the swing forecast of 2431.90.

Now that Point C has been formed, bullish traders can enter on the long-side for the start of a rally and a possible change in trend to up on a trade through 2437.30. If the price and time target is reached, then aggressive counter-trend traders may want to trade the short-side for a correction into the retracement levels.

For further information on this and other Autochartist products visit our website at www.autochartist.com.