Back in late December, I warned that we were approaching the 261.8 Fibonacci resistance level on the Dow Jones Industrials:
“We are now at the 261.8 Fibonacci price level. Will this level bring market turbulence… sideways, lower, etc… ? Stay tuned.”
So what happened after hitting this level? Well, all kinds of win streaks ended and both the Dow and S&P stopped on a dime! Market volatility picked up and investors saw the quickest 10% decline in history from all-time highs. Will this become a “wall of resistance”.
The exact same thing occurred on the S&P 500 chart further below. Coincidence?
Once this level was hit, both the Dow Jones and S&P 500 produced “hangman” candle patterns the following month (February). Yes, bulls may have trouble tearing down this wall of resistance!
Dow Jones Industrials – 261.8 Fibonacci “Wall”
S&P 500 – 261.8 Fibonacci “Wall”
The SPDR Dow Jones Industrial Average ETF (DIA) rose $0.04 (+0.02%) in premarket trading Friday. Year-to-date, DIA has gained 0.71%, versus a 2.71% rise in the benchmark S&P 500 index during the same period.
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