From Bloomberg News yesterday…another myth clings to life:
“Crude oil plunged as low as $45.25 yesterday, after falling below $45.485 a barrel, said Steve Taylor, a trader with New West Petroleum Inc. in Sacramento, California, citing charts traders watch to predict price moves. A Fibonacci graph of the increase from June 30 to the peak of $55.67, identifies $45.485 a barrel as the 50 percent retracement of the rise. Fibonacci analysis is a tool, named for a 13th Century mathematician, which is used by technical traders who chart historical prices and volumes to discern trends and turning points in a market. ‘That spooked a few people out of the market,’ said Steve Taylor, a trader with New West Petroleum Inc. in Sacramento, California. ‘We saw the funds liquidating all day long.'”
Fibonacci as prediction? Not exactly: read.
Lesson? Think critically.