One of the main reasons that Price Action works so well is because the market has a memory. Here, I have studied the price behavior of Pilgrim's Pride and its relations to the Fibonacci levels. Ever since the start of this ticker in the exchange, the price has indicated sensitivity to the 50% Fibonacci level after a strong bearish move ends. In other words, whenever there was a strong bearish move and the stock bottomed and began to rise, it reached or came close to the 50% Fibonacci level only to move down thereafter. This is precisely the case if the price retraces up to the 38.2% level after the previous downward move. This is repeated twice; June 2012 and May 2016. In both cases, the price has a very strong downward momentum. Eventually, when the downward momentum ends, the price begins to move upwards. It passes the 38.2% Fibonacci, comes close or even touches the 50% Fibonacci, and moves downward right after. The bearish move the follows pushes the price as low as the 23.6% Fib.
All this said, how can we generate some money from this? The following is my trading style for this observation. In the case the same scenario is forming, I will first wait for the price to pass the 38.2% Fib and keep watching until the price touches or comes close to 50% Fib. At this point, I will use the Awesome Oscillator as my trigger. Whenever the color of the AO changes to red, I will open a short position considering other parameters of my trading methodology (i.e. Money Management).
I believe the same scenario is about to form for another time. I will definitely keep watching the stock for any trading opportunity and I will post if something emerged.
All this said, how can we generate some money from this? The following is my trading style for this observation. In the case the same scenario is forming, I will first wait for the price to pass the 38.2% Fib and keep watching until the price touches or comes close to 50% Fib. At this point, I will use the Awesome Oscillator as my trigger. Whenever the color of the AO changes to red, I will open a short position considering other parameters of my trading methodology (i.e. Money Management).
I believe the same scenario is about to form for another time. I will definitely keep watching the stock for any trading opportunity and I will post if something emerged.