Category: Features

Fibonacci Extensions

What Are Fibonacci Extensions?

Fibonacci extensions are a tool that traders can use to establish potential price targets or estimate how far the stock price may move. Extension levels are also possible areas where the price may reverse.

  • Common Fibonacci extension levels are 61.8%, 100%, 161.8%, 200%, and 261.8%
  • The Fibonacci extensions show how far the next price wave could move following a pullback.
  • Fibonacci ratios are common in everyday life, seen in galaxy formations, architecture, and how some plants grow. Therefore, some traders believe these common ratios may also have significance in the financial markets.
  • Extension levels signal possible areas of importance but should not be relied on exclusively.

The Formula for Fibonacci Extensions

 

There are three points that a trader has to choose from.

      1. The first point chosen is the start of a move
      2. The second point is the end of a move
      3. The third point is the end of the retracement and the base of where the calculations will start.

The extensions then help project where the price could go next. Once the three points are chosen, the lines are drawn at percentages of that move.

Extensions are drawn on a chart, marking price levels of possible importance.

 

734.09 τςΙΑ1Υ10 [NASDAQ] D: 9/1/21 Ο: 734.08 Η: 741.99 L: 731.27 C: 734.09 R: 10.72 ΙΙ,ιΙ 13,204335 Share style Drawings 8/16 Studies $918.09 5773.72 5718.57 5629.35 557412 Patterns 700 500 400 9/21 10/5 10/12 10/19 11/9 11/16 11/30 12/7 12,121 2,18 2,115 3/1 3/15 3/29 4/12 4/19 5/10 5/17 6/14 7/12 7/19 8/2 8/30 9/13 9/20

 

How to Calculate Fibonacci Levels

      1. Find the difference between your first point and your second point. This will be the “range” of your Fibonacci.
      2. Multiply the difference between points one and two by any of the ratios desired, such as 1.618 or 0.618. This gives you a dollar amount.
      3. If projecting a price move higher, add the dollar amount above to the price at point three. If projecting a price move lower, subtract the dollar amount from step one from the price at point three.

 

For example, using the Tesla chart provided above:

      1. Point one is $430.91; point two is $575.28. This makes the range $144.37.
      2. Our point three is $485. If we wanted to find what the 61.8% or the 0.618 retracement level is, you would do the following:
        1. Multiply the range, $144.37, by the coefficient of 0.618
        2. This will give you $89.22
        3. To find the level 61.8% level above $485, you will add $89.22, and if you want the 61.8% level below $485, you will subtract $89.22
        4. The results are: $574.22 and $395.78
      1. Do this for your desired ratios. I personally enjoy using the 0.5, 0.618, 1.382, 1.618 and 2.382

What Do Fibonacci Extensions Tell You?

 

Fibonacci extensions are a way to establish price targets or find projected areas of support or resistance when the price moves into an area where other methods of finding support or resistance are not applicable or evident. If the price moves through one extension level, it may continue moving toward the next. That said, Fibonacci extensions are areas of possible resistance and support. The price may not stop or reverse right at the level, but the area around it may be important. For example, the price may move just past the 1.618 level or pull up just shy of it before changing directions. Fibonacci extensions can be used for any timeframe or in any market. Typically, clusters of Fibonacci levels indicate a price area that will be significant for the stock and traders in their decision-making. Since extension levels can be drawn on different price waves over time, when multiple levels from these different waves converge at one price, that could be a critical area.

 

The Difference Between Fibonacci Extensions and Fibonacci Retracements

 

While extensions show where the price will go following a retracement, Fibonacci retracement levels indicate how deep a retracement could be. In other words, Fibonacci retracements measure the pullbacks within a trend, while Fibonacci extensions measure the impulse waves in the direction of the trend. Limitations of Using Fibonacci Extensions Fibonacci extensions are not meant to be the sole determinant of whether to buy or sell a stock. Investors should use extensions and other indicators or patterns when determining one or multiple price targets. Candlestick patterns and price action are especially informative when determining whether a stock is likely to reverse at the target price. There is no assurance price will reach or reverse at a given extension level. Even if it does, it is not evident before a trade is taken which Fibonacci extension level will be important. The price could move through many of the levels with ease or not reach any of them.

 

 

Tiger Wolf Capital : Stocks to trade this week

$BA Boeing

News: Southwest Airlines on Monday said it is buying 100 new Boeing  737 MAX jets.

This is big news for Boeing, which lost hundreds of orders during a prolonged grounding of the troubled jet and reduced demand for travel during the coronavirus pandemic.

The order for the MAX 7 jets, the smallest MAX variant, means Boeing will retain its lock on one of its most important airline customers. Southwest’s fleet is made up entirely of 737 jets, but the carrier had been re-evaluating that strategy.

Technical Analysis: On Monday: $BA closed @ $250.52, +2.31% from Friday’s close.

In my personal opinion, I do not think this news is big enough to make the stock continue going up.

I think this was a 1-time push and we should anticipate more downside to come.

I do believe $BA will trade lower into $242.69 and maybe even 233.78

I like the $230puts for 4/9 – currently trading @ 1.90

 

 

PENN Penn National Gaming Inc.

News:  Deutsche Bank Gaming report warns about NY government being more pessimistic about passing new gaming laws.

Now I personally do not agree with the report, but I do see the stock continue to sell-off.

After recently joining the S&P500 ETF, SPY, investors are not interested in owning the individual company when they can just bet on the overall market doing well.

On Monday, PENN closed at $98.21, down 7.85% from Friday’s closing price.

I do see the stock heading lower into $86.17

I do like the $90 puts for 4/9, currently trading at 2.41

Join our discord for more trade ideas like this: https://www.tigerwolfcapital.com/discord/

Tesla increases Model Y price in China after successful launch in the market

Tesla has increased the price of the Model Y electric SUV in China last night after a successful launch in the market.

In January, Tesla launched the Model Y in China.

The launch of the electric SUV was highly-anticipated since the electric crossover/small SUV segment is very popular in the market, and since Tesla was waiting on producing the vehicle at Gigafactory Shanghai before launching it in the country, the market was curious about the price point Tesla could hit.

The automaker ended up launching the Model Y at a lower than expected price of 339,900 yuan ($52,000) for the Long Range Dual Motor version, and the Model Y Performance version started at 369,900 yuan ($56,600).

It was a successful launch as the automaker delivered just over 1,600 Model Y electric SUVs in China in January and quickly ramped up to 4,630 Model Y deliveries in February.

As we previously reported, Tesla sold out the first quarter of planned production in just a few days, and Model Y is believed to already be putting pressure on competitors NIO and Xpeng.

Now, Tesla has decided to increase the price of both Model Y versions in China overnight:

 

Tesla Model Y, China

The price has increased by 8,000 CNY, which is the equivalent of about $1,200 USD.

As usual, Tesla didn’t disclose the reason behind the price changes, but the automaker also made several price changes in the US and other markets in recent months.

Tesla’s Model Y production ramp-up at Gigafactory Shanghai is being followed closely by the market as it is expected to be the biggest contributor to the automaker’s growth in 2021.

The company has hinted at producing as many as 200,000 Model Y vehicles at the factory this year.

Gigafactory Shanghai could produce up to 450,000 vehicles in 2021.

The factory has already been a great success for the automaker, and now, it is trying to recreate that success at Gigafactory Berlin and Gigafactory Texas, which are currently both under construction and where Tesla plans to also produce the Model Y.

Disagreement about U.S. and Euro-Area Inflation Forecasts

FRBSF Economic Letter

2021-08 | March 22, 2021 | Research from the Federal Reserve Bank of San Francisco

Disagreement among economic forecasters about the outlook for inflation in both the United States and the euro area has increased since the onset of the pandemic. The nature of these forecast differences can provide insights into the inflation risks that lie ahead. Many forecasters initially expected substantially lower inflation over the next year but subsequently raised their expectations as economic activity began to improve. In contrast, changes in expectations and disagreement about longer-term inflation have been relatively subdued and suggest a balanced likelihood between higher and lower inflation.