GFC, Corona, Fibonacci and S&P500 as of Now
This is the topic of our Blog Post this week. In this post, let us highlight the similarities between Market conditions during GFC and Corona virus pandemic. We will analyse the 2 situations (GFC and Corona) for the world’s biggest stock index S&P500. We will demonstrate these conditions through the use of the powerful Fibonacci Ratio (0.618 or 61.8% which is the inverse of the Golden Ratio 1.618 or 161.8%).
As we all know by now, during GFC (2007-2008), S&P500 corrected itself from the high of 1,575.75 to a low of 666.43. This was a correction of 57.71% or 909.32 points in 1 year and 4 months. During Corona virus pandemic, S&P500 has corrected (so far) from the high of 3,397.20 to a low of 2,184.31. This is a correction of 35.70% or 1,212.89 points from the top in only 1 month and 3 days.
Now the Similarities between Market conditions during GFC and Corona virus pandemic: On 26-Apr-2010 during recovery from GFC, S&P500 faced the resistance at 61.8% Fibonacci Level which was at 1,228.39 (refer left hand side of the chart). Exactly from that point and that day, S&P500 came down 16.75% or 203.25 points during next 2 months and 4 days. Now during Corona virus pandemic, S&P500 is facing the same resistance at same 61.8% Fibonacci Level which is currently at 2,933.88 price level. S&P500 has already interacted and is now, at the time of writing this blog post, interacting with this 61.8% Fibonacci Level at 2,933.88. From 29th April 2020 till date, during Corona virus pandemic, price of S&P500 has got rejected 2 times from the 61.8% Fibonacci level as below:
1. first on 30th April 2020 and then on
2. 11th May 2020.
Within last 5 days of during Corona virus pandemic i.e. from 18-May-2020 till 22-May-2020, S&P500 has closed once below the 61.8% Fibonacci level and 4 times above the 61.8% Fibonacci level.
Now the big question: is S&P500 going to repeat the same price action during the Corona virus pandemic as it did during GFC? Or this time S&P500 will follow some other way and do something different than that of GFC?
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Written by
Partha
Partha Banerjee is the Founder, Principal Trader, and Director of N P Financials Pty Ltd, one of Australia’s most respected ASIC-regulated proprietary trading and trader-training firms and an AFSL holder. With decades of experience across multiple market cycles, Partha is known for his disciplined, structure-first trading approach, grounded in transparency, risk management, and real-market execution.
He actively trades the same strategies he teaches, specialising across Forex, Equities, Commodities, Indices, Cryptocurrencies, and intraday markets. Under his leadership, N P Financials has become a globally recognised trading education and proprietary trading organisation, earning multiple national and international awards for regulatory excellence, educational depth, and long-term trader outcomes.
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