Standard Fibonacci Test
If biotech’s reversing to the downside, then it’s behaving normally.
As we’ll see below, today was a standard 50%, Fibonacci retrace on the daily.
There’s an added bonus of 1 : 1, correlation on the corrective wave up to that 50%; shown on the hourly chart.
Just to get our bearings, we’ll present the longer time frame, the weekly below.
Biotech SPBIO, Weekly
Next, we’ll get closer in on the daily.
Observe the Fibonacci retrace from the recovery high (8/11/22), the interim low (8/22/22), and today’s potential retrace high.
The next chart is a zoom of the retrace area
Bonus: Hourly Chart w/ Fibonacci Projection
Corrective waves follow an ‘a-b-c’ pattern with each having Fibonacci relationships between themselves.
The hourly chart below has the retrace from the 8/22/22, interim low.
The current location of the top of ‘wave c’, is a near perfect 1 : 1, ratio of the initial ‘wave a’.
The zoom chart below attempts to provide detail on where the wave terminations were identified.
The left blue arrow is the top of corrective wave ‘a’.
The right-side blue arrow is the bottom of wave ‘b’ and the beginning of wave ‘c’.
So, what does that all mean?
We’re at an inflection point.
If SPBIO has retraced 50%, of its initial leg down from a long term high, then expectations are for continued downside action.
The fact we had a countertrend move that mapped out a near perfect 1 : 1, a-b-c correction, points probabilities to the downside as well.
However, in the market, there are no guarantees.
Charts by StockCharts
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