The Big Boys, page-407

gj, some quick thoughts in reply:

Re your comments written on the chart about the trade. The ATH50% and ATH25% levels are targets for the way down. Now that's it's reached the 25%ATH level that's done. You need to consider a new plan now for the next bullish phase. Consider also that momentum was strong late in the fall, but often after a large fall will build up slowly from a base. Lots of 50% hits on way down, might or might not apply as it starts up again.

The 50% retracement of a range (being low-high or high to low) seems to be about reversion to the mean or average. Waves naturally try to swing back to a mid-point which makes this strong. But each stock has its own personality. I recall BHP is a stock that respects 50% price levels a lot as does CAJ it seems. But other stocks might respect fib levels of 61.8% /38.2% more. Also stocks in different phases bear and bull or Elliot wave may have different personalities. It's an argument for getting to know a handful of stocks really well with lots of historical analysis of patterns and price levels etc to anchor your trading.

The ATH50% and other levels are a bit different. Seems to be more psychology maybe when something falls from a high and is half price, not sure. But this pattern I've talked about is one of the few where I'll rely primarily on price levels for entry and exit. Mostly price levels give targets and a lot of information but I use other TA for entries. I'm not sure it would be consistently successful trading price levels alone such as 50% level, at least without other confirming TA.

Perhaps you might paper trade your 50% reversions for a bit more on the stock or go back over CAJ further in history and do more analysis of when it comes off a low, to see if your potential 50% reversion trade will work.

Agree not much difference between close fib levels, but it does help to work consistently across charts with the same set of levels.