Gann, Elliott and other fans of innovative approaches have spent years studying mystical market, trying with the help of these approaches to extract the hidden profits. Magic numbers, astrological dates and other such methods have been tried in an attempt to unravel the secrets of impalpable trade.
Most traders believed that the Fibonacci series is in the same category of magic numbers, but in reality, the science is quite rationale. In the 12 th century monk known as Fibonacci, discovered a logical sequence, which manifests itself everywhere in nature. Since 1 + 1, the two last numbers, in the amount of creating the next Fibonacci number. For example: 1 +1 = 2, 1 +2 = 3, 2 +3 = 5, 3 +5 = 8, 5 +8 = 13 8 +13 = 21, 13 +21 = 34, 21 +34 = 55 and etc.
The basic relationship between the Fibonacci numbers define the expected levels of recovery in the correction of market ups and downs. The most common Fibonacci levels of recovery were 38%, 50% and 62% from the price movement. These price levels at which many traders expect important turn and a strong movement. For obvious reasons, they also represent the input signals in many short-term strategies.
Levels Fibonacci and Elliott wave is closely interrelated. According to Elliott, the main movement occurred in three main waves, with two counter-trend waves between them. These waves often end in the main levels of recovery. Please note, as the restoration of the Fibonacci levels can also determine where the market price of jump from one to another.
Markets fluctuate between normal levels of recovery, as they move from support to resistance and to the rear. But in recent years, trading, building on this momentum has been difficult. There is a fault of the Fibonacci levels of popularity as a technical tool. Many of the major players can trade against the key levels of recovery, because they know that other smaller traders enter the market at these prices. For example, the market maker can sell at the level of support in order to build a stop-order and below it.
But despite this, the use of Fibonacci levels of recovery are extremely valuable for swing traders (trading on the movement). Taking as the basis of the Fibonacci levels of recovery, use the other aspects of technical analysis to improve reliability. Never deal in levels of recovery in isolation. Look for other forms of support or resistance at the same price level. For example, if you see a 50-day Moving Average, maximum and intermediate trend line converge at the 62% th level of recovery, the chances for a major turn greatly increased.
You can also try to sell at the intersection of Fibonacci levels in the quick turn. Look on the side when the price recedes to a normal level of recovery.
Let other traders get to this bait and quake when the price breaks through the level of recovery. Then let the market turn and jump back through the level of recovery. Use this intersection as a signal to enter the market. Markets generally violate the rules of the game only one way traffic.
Use less common recovery strategy to avoid the crowds. GM Gartli in his book 1937. "Gains in the stock market" described the little-known Fibonacci ratio. Model Gartli based on 78% of the first restoration and provides another way to profit at the intersection of 62%-level. This classic setting, first described nearly 70 years ago, works just as well today.
You can also trade in lieu of reinstatement Fibonacci extensions. Market "mathematician" Larry Pezavento provides a variety of models Gartli, which he called the Model butterflies. This is a complex formation, which continues the movement of prices of 27% more 100%-level recovery, before going on a turn.
The combination of all these waves and ratios can, of course, looks confused. But one of the advantages of the use of Fibonacci mathematics is its ability to confuse the majority of traders. Eventually, the markets rarely reward trading style used by the majority of market players.
Most traders believed that the Fibonacci series is in the same category of magic numbers, but in reality, the science is quite rationale. In the 12 th century monk known as Fibonacci, discovered a logical sequence, which manifests itself everywhere in nature. Since 1 + 1, the two last numbers, in the amount of creating the next Fibonacci number. For example: 1 +1 = 2, 1 +2 = 3, 2 +3 = 5, 3 +5 = 8, 5 +8 = 13 8 +13 = 21, 13 +21 = 34, 21 +34 = 55 and etc.
The basic relationship between the Fibonacci numbers define the expected levels of recovery in the correction of market ups and downs. The most common Fibonacci levels of recovery were 38%, 50% and 62% from the price movement. These price levels at which many traders expect important turn and a strong movement. For obvious reasons, they also represent the input signals in many short-term strategies.Levels Fibonacci and Elliott wave is closely interrelated. According to Elliott, the main movement occurred in three main waves, with two counter-trend waves between them. These waves often end in the main levels of recovery. Please note, as the restoration of the Fibonacci levels can also determine where the market price of jump from one to another.
Markets fluctuate between normal levels of recovery, as they move from support to resistance and to the rear. But in recent years, trading, building on this momentum has been difficult. There is a fault of the Fibonacci levels of popularity as a technical tool. Many of the major players can trade against the key levels of recovery, because they know that other smaller traders enter the market at these prices. For example, the market maker can sell at the level of support in order to build a stop-order and below it.But despite this, the use of Fibonacci levels of recovery are extremely valuable for swing traders (trading on the movement). Taking as the basis of the Fibonacci levels of recovery, use the other aspects of technical analysis to improve reliability. Never deal in levels of recovery in isolation. Look for other forms of support or resistance at the same price level. For example, if you see a 50-day Moving Average, maximum and intermediate trend line converge at the 62% th level of recovery, the chances for a major turn greatly increased.
You can also try to sell at the intersection of Fibonacci levels in the quick turn. Look on the side when the price recedes to a normal level of recovery.
Let other traders get to this bait and quake when the price breaks through the level of recovery. Then let the market turn and jump back through the level of recovery. Use this intersection as a signal to enter the market. Markets generally violate the rules of the game only one way traffic.
Use less common recovery strategy to avoid the crowds. GM Gartli in his book 1937. "Gains in the stock market" described the little-known Fibonacci ratio. Model Gartli based on 78% of the first restoration and provides another way to profit at the intersection of 62%-level. This classic setting, first described nearly 70 years ago, works just as well today.You can also trade in lieu of reinstatement Fibonacci extensions. Market "mathematician" Larry Pezavento provides a variety of models Gartli, which he called the Model butterflies. This is a complex formation, which continues the movement of prices of 27% more 100%-level recovery, before going on a turn.
The combination of all these waves and ratios can, of course, looks confused. But one of the advantages of the use of Fibonacci mathematics is its ability to confuse the majority of traders. Eventually, the markets rarely reward trading style used by the majority of market players.
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