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Hi traders,
I've worked out some analyses for Cisco - maybe you can do this for Oracle,
which I don't track: You may want to print this coz it is long.
First, some elementary math:
1. Fibo retracements that are working with Cisco:
Period: 7/24/96 - 1/21/97
Values Used to Calculate Range Support/Resistance Levels
(44.75) ------- (75.75) (gain of 31 points)
Support/Resistance Levels: ( 56.592) ( 60.25)** ( 63.908)
.382 .50 .618
Extension Levels: ( 83.066) ( 87.592) ( 94.908)
1.236 1.382 1.618
4/22/97 - 5/28/97
Values Used to Calculate Range Support/Resistance Levels
(45.25) ------- (70.125) (gain of 24.875 points)
Support/Resistance Levels: ( 54.75225) ( 57.6875) ( 60.62275)**
.382 .50 .618
Extension Levels : ( 75.9955)*** ( 79.62725) (85.49775) ( 95)
1.236 1.382 1.618 2.0
Following numbers from the 7/96-1/97 patterns coincide with the latter pattern
- within a few cents:
a. On 4/22/97, 45.25 was 50c higher than the exact low reached on 7/24/96.
Both therefore represent a major support zone, and therefore I used these as
anchors for the low end of the Fibo range. On a side note, this is also
exactly what happened with Computer Associates.
b. The 1.236 extension on the second range (75.9955) is 25 cents higher than
the highest high (75.75) reached in the 7/96-1/97 period. Coincidence? I don't
know - we wouldn't have known this in Jan 97 - but since prices headed lower
from 75.75, that would become a natural resistance area.
c. The first range (7/96 - 1/97) threw up 56.592, 60.25 and 63.908 as
retracements. The second range tossed out 60.62275 (very close to 60.25) as a
retracement. Obviously, 60.25 is a major number to watch out for - even
though other retracements in the second range are within 2 dollars of the
retracements in the first range.
I'm fading out all numbers other than 60.25 coz - heck, given enough numbers
with close start and end points of the range, everything is going to be within
2 dollars!
Now lets see what actually happened on the chart.
In its current bounce from 4/22/97 to 5/27/97, 60.25 was tested 7 times, and
price action over the last 5 days (not counting 6/11/97) has restricted
between 63.625 and 68.
Guess what - 63.625 is within 29 cents of the .618 retracement from the
7/96-1-97 range.
Conclusion?
I'd peg 60.25 as the lower end of where Cisco can go in the present, assuming
that 63.625 is conclusively breached.
If I were to go long at the market today, that's where I'd put my sell stop.
If I am not long and am waiting for an opportunity to get in, I'd look at some
other indicators: (all data is as of 6/10)
1. Williams %R: - 67.213 Not yet oversold
2. CCI - Standard: -41.37 - Not yet oversold
3. CMO: 8.8949, not yet oversold.
4. 50 day MA: 57.45, trending up
5. 200 day MA: 60.73 trending flat
Okay:
a. I'd wait for conditions to be more oversold
b. More importantly, also wait for confluence of 50 DMA with 200 DMA,
oversold conditions, and a major Fibo support level - in all probability,
everything will come together in the 60.25 region.
On second thought, I'd rather go long at 60.25 +/- 75 cents for a good fill,
with a sell stop at 57.70 so that I don't get stopped out by a single day's
volatility.
Matter of fact, I'm placing my order at 60.25 right now.
Hey - I didn't make this up - it just happened!!
Happy hunting
Gitanshu
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