Above you have a 60 minute chart of the ES, the last and final wave down or sell off we had first retraced back up into it’s 50% or half way back, where it found heavy resistance and immediately the sell off continues. What I want to point out is where the sell off stopped? Take a close look, the -23% target not only becomes the profit target spot but also acts as support and begins this move we have had the last week.
When I initially started using targets for all my setups, I started using the -50%, seemed right, you buy/short the 50% into the -50%, easy enough? Well the problem was I continued to find the -50% was just too far away and the chances of it being hit in a timely manner were not as good as I would have liked. I tried a few others, but for me the -23% gave the best risk/reward ratio. I find very often it if where profit taking starts and a conter trend into the next 50% begins a lot of times.
So in a bull market like this we are in, a great time to take a counter trend trade anticipating breaking the bearish setups would have reaped tremendous results in a short amount of time. Remember these Fibbonnacci Retracements are available on most charting packages, you may have to take some time to set it up as I have but trust me it is well worth it.