Since making a double bottom early this year the upward advance in the S&P 500 index has defined several important areas of support and resistance. The “W” shaped double bottom base formed under resistance in the 1946 area and the rally began in earnest when that level was broken to the upside.
After the initial momentum faded the index consolidated above support in the 2030 area, eventually continuing higher after a brief one-day move below support that touched the 1988 level. At that point the rally powered back up taking out last month’s high and moving up to the 2167 level.
If we take these important technical levels and progressively overlay potential Fibonacci levels on them, they fit the ratios perfectly and project that the high in the index should be at or near its current level.
This is not the conventional method of applying Fibonacci projections and I am not calling a top in the market. It is simply an novel way to apply a popular but esoteric technical tool, that has interesting results.