Micron Technologies gives us a good price cluster example on a daily
chart. The support cluster illustrated in Figure 6-26 was first tested on
10/12/05. The cluster developed between the 12.34–12.43 area from the
following price relationships:
.382 retracement of the 7/1/05 low to the 10/3/05 high = 12.36
(point 1 to point 5)
.50 retracement of the 8/18/05 low to the 10/3/05 high = 12.37
(point 3 to point 5)
.618 retracement of the 9/29/05 low to the 10/3/05 high = 12.43
(point 4 to point 5)
1.0 projection of the 8/2/05 high to the 8/18/05 low, projected from
the 10/3/05 high = 12.34 (point 2 to point 3 projected from point 5)
An important low was made at 12.37, which was directly within the
price cluster zone. We saw an eventual move to 14.82 from this low.