Fibonacci Price Retracement for AOL

AOL tagged the 50% price retracement level on the 12th of September 2003.

From the early August 2003 low to the early September 2003 high, AOL has given back approximately 50% of that gain.  The 60 minute chart is shown below.

Zooming in on the price action on the 60 minute intraday chart shows the stock reversing strongly to the upside near the 50% level.  AOL makes a bottom only $0.05 (5 U.S. cents) below that retracement level.

 Reversal still needs confirmation

Just because AOL "touched" the 50% retracement level doesn't mean it is a buying opportunity.

Confirmation of a potential bottom and a subsequent rally occurs once AOL trades above the most recent swing high.  That occurred on the previous day, Thursday.

Traders will consider taking a long position in AOL as the stock trades above $16.18.  If filled, then a protective sell stop goes in below the recent low of $15.74.  Initial risk should be less than half a dollar.

Otherwise, traders can use  the smaller time frame to take a position - but only after the stock takes out a swing high.  

Recommended

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