— J.C. Parets (@allstarcharts) October 17, 2019
Today’s Chart of the Day was shared on Twitter by JC Parets (@allstarcharts). It’s a monthly candlestick chart of Dow Futures going back to 2004. The chart shows the key Fibonacci extension levels (161.8%, 261.8%, and 423.6%) measured from the 2008 decline. The chart serves as a great example of the way price tends to behave around important Fibonacci levels. The Dow broke above the 2007 high in 2013. It then spent the next two years rallying until it ran into the 161.8% Fibonacci extension. At which point, the Dow spent a year and a half (2015-late 2016) consolidating before breaking out after the 2016 election. From there, the index steadily rallied to the next Fibonacci level, 261.8%. Price is finally breaking above this level after having spent over a year and a half consolidating below it. JC explains that the risk is to the upside as long as we’re above that 261.8% Fibonacci extension, around $27,000.