Technical Analysis Workshop Series Session Seven Fibonacci Trading Part 1
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Agenda Profile Introduction Who is Fibonacci and How He Can Help You with Your Trading? How the Ratios (Golden Ratio) Are Derived From? Fibonacci Projections and Retracements The Relationship among the Retracement & Extension Levels Types of Fibonacci Price projections Fibonacci Analysis is a Leading Indicator
Profile Active member of TASS Graduated from NTU in 1976 25 years of experience Runs Investor s Educational Aids, a private investors club Part-time Lecturer of NUS Extra-mural Studies Dept(1988 to 1994) for Forexand Derivative Products Investment Courses FM FIBONACCI & BC MODEL SEQUENCE PROJECTION DOW AND THEORY
Introduction Tothe Technical Trader, the chart is nothing more than what an x- ray is to a Doctor. It shows high probably of the next move in the market. The main reason most traders lose money in the market is they have no idea how to make sense of all that price movement: Where should I get in? Where is the safest place? How much can I afford to risk? How much will I gain? Should I wait a little longer? FM FIBONACCI & BC MODEL SEQUENCE PROJECTION DOW AND THEORY
FIBONACCI TRADING TECHNICAL ANALYSIS
Who is Fibonacci and How He Can Help You with Your Trading? Great mathematician Wrote "Libre Abaci (Book of Calculation) Introduced the numerical numbers to the Romans Fibonacci Series: Each number is the result of adding together the previous two numbers in the sequence. TECHNICAL ANALYSIS
Fibonacci Series The Fibonacci Series goes like this... 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, etc. all the way to infinity. As you can see: each number is the result of adding together the previous two numbers in the sequence. 1+1=2, 1+2=3, 2+3=5, 3+5=8, 5+8=13, 8+13=21, 13+21=34, etc. all the way to infinity.
How the Ratios (Golden Ratio) Are Derived From? Prev/ Last Fibonacci Series Last / Prev 1 1.0000 1 1.0000 0.5000 2 2.0000 0.6667 3 1.5000 0.6000 5 1.6667 0.6250 8 1.6000 0.6154 13 1.6250 0.6190 21 1.6154 0.6176 34 1.6190 0.6182 55 1.6176 0.6180 89 1.6182 0.6181 144 1.6180 0.6180 233 1.6181 0.6180 377 1.6180 0.6180 610 1.6180 0.6180 987 1.6180
FIBONACCI
Fibonacci Projections and Retracements Fibonacci price projection and retracement methodologies will give you foresight into the potential upcoming moves in time and price in the market you are currently trading whether you trade a daily chart or five-minute bars.
Fibonacci Projections and Retracements To predict where the market may go in the future. To determine turning points in advance is important for every trader. Fibonacci ratios are common in almost everything in nature from flowers, to the human body, seashells etc. Fibonacci ratios are easy to use and just as easy to calculate. You take the range from one pivot to the next and add or subtract the ratios. The important fact or phenomena is, the market moves in a Fibonacci Series of ratio price movements. There are rallies, retracements and extensions as well as dips, retracements and extensions. Ratios for Price Retracement Levels: 0.236, 0.382,0.50,0.618, 0.707 and 0.886. Ratios for Price Extension Levels: 1.272, 1.414, 1.618, 2.00, 2.236 and 2.618.
The Relationship among the Retracement & Extension Levels Reciprocal Square Root 4.237 0.236 0.486 2.618 0.382 0.618 2.000 0.500 0.707 1.618 0.618 0.786 1.414 0.707 0.841 1.272 0.786 0.887 1.000 1 1.000 0.500 2 1.414 0.333 3 1.732 0.250 4 2.000 0.200 5 2.236
The Relationship among the Retracement & Extension Levels Reciprocal Square Root 4.237 0.236 0.486 2.618 0.382 0.618 2.000 0.500 0.707 1.618 0.618 0.786 1.414 0.707 0.841 1.272 0.786 0.887 1.000 1 1.000 0.500 2 1.414 0.333 3 1.732 0.250 4 2.000 0.200 5 2.236
The Relationship among the Retracement & Extension Levels 1. Retracement 2. Extension 3. Expansion 4. Alternate
The Relationship among the Retracement & Extension Levels Retracementstake the distance from one pivot to the next. Preferably a #1 to a #2 pivot and take a portion of that range that is generally 100% or less. Common ratios to calculate retracements are 0.236, 0.382, 0.500,.0.618, and.0.786 and 0.886.
The Relationship among the Retracement & Extension Levels Extensionstake the range from point #1 to Point #2 and multiplying that distance by a Fibonacci number, add the two numbers together and project into the future where a possible turning point could be.
The Relationship among the Retracement & Extension Levels
The Relationship among the Retracement & Extension Levels Expansionstake the distance from the # 3 pivot to the #2 pivot and then multiply that distance by Fibonacci numbers and add that range to the #3 pivot
The Relationship among the Retracement & Extension Levels
The Relationship among the Retracement & Extension Levels Alternatestake the distance between point #1 and point #2 and adding that distance to point #3 to give you another type of projection into the future.
The Relationship among the Retracement & Extension Levels
Fibonacci Analysis is a Leading Indicator How to calculate probable future turning points. Extensions and expansions for taking profits. Entry and exit levels, and stop placement levels. Where buyers are likely to support the market. Where sellers should be taking profits. Where the high probability trades are. Which Fibonacci levels are more likely to turn the market. Fibonacci use from intra-day to longer-term trading and all markets.
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