Fibonacci is my friend!

 

I'm sure many people are familiar with the sequence of Fibonacci numbers. This is a series of numbers 1,1,2,3,5,8,13,21,34,55,89,144...where each subsequent number is the sum of the previous two.

 

Fibonacci numbers have many properties, one of which can be described as: if any number in the sequence is divided by the previous one, we get a value that tends to 1.618. This number is called the proportionality coefficient or, more beautifully, the Golden ratio. We have noticed a huge number of natural phenomena that can be characterized by the properties of the Fibonacci sequence. That is, the purest mathematics is often next to us, with nature, in everything around us.

If this amazing sequence finds so many uses in life, why not use it in the financial markets? This is what the outstanding researchers of financial markets did in their time. One of the first was Ralph Elliott, who developed his wave theory. I followed the cycles in the Forex market, determined some regularities in the form of wave structures.

 

At some point, he realized that the depth of the correction to the momentum can be predicted by one or another percentage level.

 

 

 

The first level, as you may have guessed, was 61.8.

 

Naturally, other minds in the financial markets also used the Fibonacci tools in parallel, studied the history and looked at what levels the price most often stops at. So there was a 38.2 and 50.0 levels. Later added levels of 23.6 and 78.2. But this is not enough, the price in history where they stayed. We need some mathematical confirmation of these levels. That's how they came to be. Each level can be calculated using mathematical manipulations relative to the number 61.8.

Also, the Fibonacci levels serve as a guide for potential targets in the momentum. In particular, to determine the end of the 3rd wave relative to the 1st and 2nd. In General, the Elliott Wave theory without Fibonacci levels is not multifunctional.

Here is one example of working out the Fibonacci levels. "Swiss", our days.

 

 

The correction clearly stopped at the level of 50.0.
Fibonacci Extensions: 1st target at the 61.8 level is nicely subdued.
We will be able to talk about the specifics of using Fibonacci levels at my webinar, analyze interesting points from history and, of course, talk about current market developments. Everyone will determine for themselves whether to be friends with the Fibonacci strategy or not!

Comments ()

    Top