Fibonacci numbers
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    Fibonacci numbers

    As Elliott admitted in his "Laws of Nature", the mathematical basis of the theory was a sequence of numbers that was opened (or, to be more precise, re-opened) by Fibonacci in the XIII century. In his honor, his discovery of the sequence was called "Fibonacci numbers."

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    Fibonacci in his time published three large works, the most famous of which is called "Liber Abaci". Through this book Europe learned Indo-Arabic number system, which later supplanted traditional for that time Roman numerals. Fibonacci works were of great importance for the further development of mathematics, physics, astronomy and engineering. In the "Liber Abaci" Fibonacci brings his sequence of numbers as a solution of a mathematical problem - finding a formula of rabbit breeding. The number sequence is: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 (to infinity). The Fibonacci sequence has very interesting features, not the least of which is an almost constant relationship between the numbers.

    The sum of any two adjacent numbers equals the next number in the sequence. Example: 3 + 5 = 8, 5 + 8 = 13, etc.
    The ratio of any number of the sequence to the next is close to 0.618 (after the first four numbers). For example: 1: 1 = 1, 1: 2 = 0.5, 2 3 = 0.67, 3: 5 = 0.6, 5: 8 = 0.625, 8: 13 = 0.615, 13: 21 = 0.619 and etc. Notice how the value of the ratio fluctuates around .618, with tapering scale of fluctuations, as well as the values: 1.00, 0.5, 0.67.

    The ratio of any number to the previous approximately equals to 1.618 (reciprocal of 0.618). For example: 13: 8 = 1.625, 21: 13 = 1.615, 34: 21 = 1.619. The higher the numbers are, the more they get closer to the value of 0.618 and 1.618.

    The ratio of any number to the next nearest is close to 0,382 and in backwards - 2,618. For example: 13: 34 = 0.382, 34: 13 = 2.615.

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    The Fibonacci sequence has other interesting relationships, or ratios, but the ones we have just seen are the most important and well-known. As we have already pointed out above, in fact, Fibonacci is not a discoverer of the sequence. The fact that the coefficient of 1.618 or 0.618 was known to the ancient Greek and Egyptian mathematicians, who called it "the golden ratio" or “golden section”. Its traces are found in music, art, architecture and biology. The Greeks used the principle of the "golden section" in the construction of the Parthenon, the Egyptians in the Great Pyramid of Giza. Properties of the "golden ratio" were well known to Pythagoras, Plato, and Leonardo da Vinci.

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    Fibonacci ratios and percentages of length correction

    Because of the three impulse waves only one stretches, the other two are equal in length and end time. If the fifth wave stretches, waves 1 and 3 should be almost equal. When the third wave stretches, waves 1 and 5 will be more or less equal.

    Minimum benchmark the top of wave 3 will be a point whose coordinates are obtained by multiplying the length of wave 1 at 1.618 and adding the product to that of the bottom of wave 2, which is a value corresponding to the lowest point of it.

    The top point of a wave 5 can be established by multiplying the length of wave 1 to 3.236 (2 x 1,618). The resulting product should be added to the value of the top or bottom of wave 1. Accordingly, we find the maximum or minimum benchmark.

    When the waves 1 and 3 are equal, and wave 5 is expected to be stretched, the price point can be obtained as follows. First, measure the distance from the bottom of wave 1 to the top of wave 3, and multiply it by 1.618. The resulting product, in turn, is added to the value of the lowest point of a wave 4.

    In the correction (in the case of normal zigzag correction type 5-3-5) wave C often reaches the wavelength A.
    Possible wavelength C can also be measured by multiplying 0.618 by the wavelength A, and subtract the product from the value of the bottom of wave A.

    In the case of a flat correction type 3-3-5, where the wave reaches to or even goes over the level of the top of wave A, wave C will be approximately equal to 1.618, the wavelength A.
    In the symmetrical triangle, the ratio of each successive wave to the previous is equal approximately 0,618.

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    CONCLUSION

    The full cycle of the bull market consists of 8 waves: 5 waves of growth, followed by 3 waves of fall.

    The trend is divided into five waves in the direction of the next in the hierarchy, which is a longer trend.

    Correction is always composed of three waves.

    Simple correction can be of two types: the zigzags 5-3-5 and 3-3-5 plane waves.

    Triangles are usually formed on the fourth waves (this model always precedes the last wave). Triangle may also be a corrective wave B.

    Every wave is a part of a longer one and divided into shorter ones.

    Sometimes one of the impulse waves stretches. The other two should be equal in terms of time and length.

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    The mathematical basis of the Elliott’s theory of wave patterns is the Fibonacci sequence.

    The number of waves that form the trend coincides with the Fibonacci numbers.

    Fibonacci ratios and the ratios of the correction lengths based on them are used to determine the price targets. The ratio of the correction to the previous movement of the market is often equal to 62%, 50% and 38%.

    Alternation rule warns that we should not expect the same manifestation of price movements two times in a raw.

    Bull markets should not fall below the bottom of the previous fourth wave.

    Wave 4 should not be overlapped with wave 1 (although this rule is sometimes violated in the futures markets).

    The main aspects of the Elliott’s theory of wave patterns are (in order of importance): the wave form, the ratio of the waves and the time.

    The best results of the wave analysis are shown in the mass market, the gold market, FOREX.

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    This Fibonacci series possesses other intriguing interactions, or perhaps ratios, but the ones we've got just viewed are usually the main in addition to well-known. Once we have brought up previously mentioned, the truth is, Fibonacci isn't any discoverer of the series. The truth that the actual coefficient of just one. 618 or perhaps 0. 618 had been recognized to the actual ancient greek language in addition to Egypt mathematicians, that named this "the fantastic ratio" or perhaps “golden section”. It's traces are normally found within tunes, artwork, structures in addition to chemistry and biology. This Greeks employed the actual rule of the "golden section" inside the building of the Parthenon, the actual Egyptians inside the Great Pyramid connected with Giza. Qualities of the "golden ratio" ended up popular for you to Pythagoras, Plato, in addition to Leonardo da Vinci.

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    I also use the fibo tool which is already builtin in the platform of robo forex. I carefully look the price action in 23.6% region and trade accordingly to that and make decision whether to buy sell , according to the candlestick which has formed and use strict stop loss to avoid fakey moves.

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    Fibonacci numbers are the numbers good enough for our use in market analysis. Fibonacci calculations which have growing and split between support and resistance points. then Fibonacci can also be used to analyze long term trend period so that we can predict when the market will form a point of support or resistance point. forex traders typically use the Fibonacci traders who do not use indicators, so they just rely on the point above or below the point to determine entry and exit from the market.

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    Quote Originally Posted by taharoyal52 View Post
    I also use the fibo tool which is already builtin in the platform of robo forex. I carefully look the price action in 23.6% region and trade accordingly to that and make decision whether to buy sell , according to the candlestick which has formed and use strict stop loss to avoid fakey moves.
    I was when I use Fibo in trading best to rely on strong ratios such as 61% and also at times when trading a Alharmonak manner and Technical Analysis better to rely on ratios of 76% and 88%, which is also considered one of the most important points that can be turned away from her prices

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