So how do you predict a future top or bottom on a stock chart?

First, measure the height of a thrusting move, in the DJ chart it was 514 points. Next, measure two retracements, one is 38.2% of that thrust, and the other is 61.8% of that thrust. These two retracements in the DJ chart are 196 points and 318 points . The red lines on the charts will guide you with these measurements. These are the most common retracements for tops and bottoms after thrusts (whether you are predicting a top or bottom depends on whether the thrust is up or down).

Now you have two highly probably areas of a predicted top (or bottom). All you have to do now is watch the price action to see if it actually confirms the top in real-time trading action. There is no certainty in trading and with only this entry-level exposure to Fibonacci techniques, you will not know which of the two retracements to apply at any time, but already this knowledge should be very valuable to you!

Try this on some of your own charts, you'll be amazed at how often these ratios are able to predict tops and bottoms! Most stock charting packages have a facility to predict these turning points, it is usually called a "Fibonacci Retracement Tool". Try it in your own charting software.