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MULTIPLE FOCUS NUMBERS AND MARKET SWINGS
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DiNapoli Levels

Now that you have a firm foundation in my approach, it's time to progress to the next level of difficulty. We'll begin this more advanced level of analysis with a Market Swing that is very typical of what you will see occurring in the market place every day. See if you can properly label the Focus Number(s) and Reaction Numbers on Chart 10-1, before turning the page.

With the exception ofpoints M and Q, does your labeling look like this?

Here's what the DiNapoli Levels would look like.

Even though point Q did not take out the high at M, the reaction low labeled T, is still significant and should be used to create DiNapoli Levels.

Notice there was a Confluence area 'K' formed between the .618 Node of Reaction 1 and the .382 Node of Reaction 2. There could be no Confluence between the .382 Nodes formed from Reactions 3 & 4, since they were both .382 Fibnodes. Ifthe .382 Node off Reaction 4 and the .618 Node off Reaction 3 were a bit closer, then we'd have another area of Confluence 'K'.

MULTIPLE MARKET SWINGS:

Now let's look at a chart that has two Market Swings, one up, one down. Can you properly label the Focus and Reaction Numbers on this chart?

In Chart 10-5, we have two Focus Numbers, Focus support Fs, and Focus resistance Fr. Focus support numbers produce Fibnodes that elicit support, while Focus resistance numbers produce Fibnodes that elicit resistance.

I'm going to assume that you can properly produce the D-Levels for the up swing. This would include a total of six (support) Fibnodes. For the sake of clarity, in Chart 10-6B, I show only two of the support Fibnodes, i.e. those associated with the portion of the up swing from Point 1 to Fs. All of the resistance Fibnodes for the down swing are shown.

TAKEN OUT BY PRICE

The first (highest) support Node survived thefirst corrective move down from Fs, even though the Node was briefly penetrated. It was clearly taken out by the subsequent move down, point FR on the chart. This first support Node is no longer active and can be removed from our consideration. It has been taken out by price. Cleaning up your charts, as well as your software tables (spread sheets or FibNodes) is essential for maximum clarity and optimum decision making.

The down move from Fs to FR has two reaction highs, four Fibnodes and one Confluence 'K' area. Excluding the possibility of some Directional Indicator leaning on price Movement, it is likely the price will bounce around between the support Node at F5 and the resistance Confluence area 'K.' Knowing that this action is likely on a short Time Frame chart allows for the possibility of scalping.

ADVANCED COMMENTS:

Let's go back and talk about this brief penetration of the .382 support Node on the first corrective move down from Fs. If it were 1986 or 1987, I would have considered that this Node was a dead issue, no longer in play. Now however, with more individuals using even crude Fibonacci analysis, there are sometimes large numbers of stops placed just under certain Fibnodes. These stops act like gasoline strewn around the pit and knowing floor traders as I do, they aren't shy about lighting the match. Since this Node was only penetrated briefly and then supported, I consider it to still be active. If we had the capability, we would drop to a lower Time Frame to see just how sharp the penetration was. The briefer the better, to consider the Node as active. We're not finished yet. We could also check out the possibility of there being an OP move down from the high at Fs to the vicinity of the first support Node. If this were the case and the Agreement range between the .382 support Node and the OP move down, takes us to the low formed before the move back up to 1, there is certainly nothing wrong with the Node. It is still in play! All we have done is fulfilled the OP. A third consideration when we drop the Time Frame, would be to look at reaction lows buried in the up move from 1 to Fs. It's possible there is a reaction low in the vicinity of the first support Node, presenting the floor with a group of tasty sell stops to go after.

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