Head & Shoulders Formation of left shoulder forms a brand new high with a corrective dip, next rally forms higher high = head, correction from head goes below high of left shoulder & near as low of the left shoulder correction, breaching up trend line, rally of right shoulder does not breach head high, retracing half to quarters of head correction.
Fibonacci
12th century monk Leonardo de Pisa, better known to his friends as Fibonacci, discovered a fascinating arithmetic sequence that appears throughout nature. Beginning with a simple one + one, the sum of the last number sets that precede it creates another Fibonacci value: For an Example is below.
1+1=2 1+2=3 2+3=5 3+5=8 5+8=13 8+13=21 13+21=34 21+34=55 etc…….
These numbers possess an intriguing number of interrelationships, such as the fact that any given number is about one.618 times the earlier number and any given number is about 0.618 times the following number.
POINTS OF PIVOT. For reasons that stay unknown, major ratios drawn from Fibonacci numbers report a predictable interaction between trend & countertrend movement in markets. The most important ones to keep in mind are 38, 2%, 50% & 61, 8%. Applying these percentages to trending cost predicts the extent of retracement contrary to the underlying trend, as well as how far a new high or low will travel. For traders, these hidden points represent invisible support/resistance zones where prices will hesitate and/or reverse
For Further Reading,
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