76.4% VS 78.6% Fibonacci Levels...Which is it? | Forex Factory

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Attachments: 76.4% VS 78.6% Fibonacci Levels...Which is it?
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76.4% VS 78.6% Fibonacci Levels...Which is it?

  • #1
  • First Post: Dec 2, 2007 2:31pm Dec 2, 2007 2:31pm
Has anyone else noticed that some charting packages and Fibonacci calculators etc. use the 76.4% level as a retracement, while others use the 78.6%? This may seem insignificant, but on higher timeframes it makes a huge difference.

If we are talking symmetry, the 76.4% is the mirror image of the 23.6% so I would think that is the likely choice, and more brokers seem to use that level. But for example Action Forex has 78.6% as the level on their Fibonacci calculator, and that is a highly respected site. Where does the 78.6% come from?
  • #2
  • Dec 2, 2007 2:53pm Dec 2, 2007 2:53pm
Quoting 24HourTrader
Has anyone else noticed that some charting packages and Fibonacci calculators etc. use the 76.4% level as a retracement, while others use the 78.6%? This may seem insignificant, but on higher timeframes it makes a huge difference.

If we are talking symmetry, the 76.4% is the mirror image of the 23.6% so I would think that is the likely choice, and more brokers seem to use that level. But for example Action Forex has 78.6% as the level on their Fibonacci calculator, and that is a highly respected site. Where does the 78.6% come from?
Use the 78.6 since it has actual fib meaning and relation to the numbers/ratios. I wondered about this, too. But the 76.4 has no meaning; yes, the 23.6 and 76.4 mirror each other but use the 78.6. Just make sure you make 100 the side from which price is retracing, that is, if price dips, make sure the high is 100, and the low is 0, and that 127.2 is a target from the dip.

Bottom line, forget the 76.4
  • #3
  • Dec 2, 2007 2:57pm Dec 2, 2007 2:57pm
Coincidentally, I was asked on how to use fibo levels on the hedge thread. And I just taught him about the 76.4 level.

Here is a perfect example of the recent 76.4% retrace in eur/chf daily chart:
http://i84.photobucket.com/albums/k28/krugger21/4-4.gif

3 wicks passed the 76.4% level but none of the bars closed below it. I never heard of 78.6% level, can't comment on that.
  • #4
  • Dec 2, 2007 2:57pm Dec 2, 2007 2:57pm
78.6% is the square root of 61.8% as 127.2% is the square root of 161.8%

Or more correctly 78.6 is square root of 61.8 then convert to percentages.
  • #5
  • Dec 2, 2007 3:04pm Dec 2, 2007 3:04pm
Quoting sam1
Coincidentally, I was asked on how to use fibo levels on the hedge thread. And I just taught him about the 76.4 level.

Here is a perfect example of the recent 76.4% retrace in eur/chf daily chart:
http://i84.photobucket.com/albums/k28/krugger21/4-4.gif

3 wicks passed the 76.4% level but none of the bars closed below it. I never heard of 78.6% level, can't comment on that.
If your fib retrace was 78.6% it would be even closer to the low of the move. But fib numbers are not meant to be exact. I think either can be used. My preference though is 78.6%
  • #6
  • Dec 7, 2007 2:56am Dec 7, 2007 2:56am
For now I suppose I will just plot both lines. Kind of a drag having to manually enter values on a fib calculator but I guess there's no choice.
  • #7
  • Dec 7, 2007 3:24am Dec 7, 2007 3:24am
Interesting.. Accucharts only offers the 76.4 option, but I see the significance of the square root of .618 = .786. I'll utilize 78.6 in MT4 since that allows manual fibs.
  • #8
  • Dec 7, 2007 3:47am Dec 7, 2007 3:47am
Don't stop there... what's the square root of .786?
  • #9
  • Dec 7, 2007 4:48am Dec 7, 2007 4:48am
78.6%
Trade what you see, not what you think.
  • #10
  • Dec 7, 2007 12:28pm Dec 7, 2007 12:28pm
Quoting Skyhr
Use the 78.6 since it has actual fib meaning and relation to the numbers/ratios. I wondered about this, too. But the 76.4 has no meaning; yes, the 23.6 and 76.4 mirror each other but use the 78.6. Just make sure you make 100 the side from which price is retracing, that is, if price dips, make sure the high is 100, and the low is 0, and that 127.2 is a target from the dip.

Bottom line, forget the 76.4
Oh come on, we all know it makes no damn difference either way.
  • #11
  • Dec 7, 2007 12:54pm Dec 7, 2007 12:54pm
You could take the average, best of both worlds!
The breaking of a wave cannot explain the whole sea.
  • #12
  • Dec 7, 2007 7:50pm Dec 7, 2007 7:50pm
.786

square root = .886

squared = .618

The square & square root of whole numbers also hold significance, as do the squares and square roots of golden ratio fib's. Do some investigation into scared geometry, also if your up to the challenge study Gann's square of 9 for insight into the square root movements of price for starters.....

It's like a big onion, it gets stronger each new layer you uncover.

fwiw.
  • #13
  • Dec 8, 2007 6:54am Dec 8, 2007 6:54am
Quoting auxesis
Don't stop there... what's the square root of .786?

Hahahahahahaha.

Anyways, yeah. The REAL magic numbers in Forex are 61.8, (1-61.8) 38.2, 127.2 161.8.

76.4 is 1-23.6, so that's where they got it from, but don't use that number.

Always look for two fibs confluencing each other, so you'll probably have the retracement of the main swing you're looking at, and maybe a larger previous swing retracement, or a projection off a previous smaller higher swing. These levels tend to be very strong.
  • #14
  • Dec 8, 2007 7:07am Dec 8, 2007 7:07am
Now I forgot, Why is 23.6% significant ?

I remember .707 is the Sqrt of .50 and .786 squared is .618
and even the sqrt of .382 is .618, but what was 23.6% again ?
I see it often and just forgot why ppl use it anyway ??
  • #15
  • Dec 8, 2007 7:20am Dec 8, 2007 7:20am
I hate to reply to my own post , but I found the answer...
Taken from investopedia.com:

The key Fibonacci ratio of 61.8% - also referred to as "the golden ratio" or "the golden mean" - is found by dividing one number in the series by the number that follows it. For example: 8/13 = 0.6153, and 55/89 = 0.6179.

The 38.2% ratio is found by dividing one number in the series by the number that is found two places to the right. For example: 55/144 = 0.3819.

The 23.6% ratio is found by dividing one number in the series by the number that is three places to the right. For example: 8/34 = 0.2352.

In addition to the ratios described above, many traders also like using the 50% and 78.6% levels. The 50% retracement level is not really a Fibonacci ratio, but it is used because of the overwhelming tendency for an asset to continue in a certain direction once it completes a 50% retracement.

So, that's what it is, the 3rd ugly stepchild of Leonardo Fibonacci.
  • #16
  • Dec 8, 2007 7:44am Dec 8, 2007 7:44am
Quoting toshi
I hate to reply to my own post , but I found the answer...
Taken from investopedia.com:

The key Fibonacci ratio of 61.8% - also referred to as "the golden ratio" or "the golden mean" - is found by dividing one number in the series by the number that follows it. For example: 8/13 = 0.6153, and 55/89 = 0.6179.

The 38.2% ratio is found by dividing one number in the series by the number that is found two places to the right. For example: 55/144 = 0.3819.

The 23.6% ratio is found by dividing one number in the series by the number that is three places to the right. For example: 8/34 = 0.2352.

In addition to the ratios described above, many traders also like using the 50% and 78.6% levels. The 50% retracement level is not really a Fibonacci ratio, but it is used because of the overwhelming tendency for an asset to continue in a certain direction once it completes a 50% retracement.

So, that's what it is, the 3rd ugly stepchild of Leonardo Fibonacci.


Yeah, I hate 50% retracement, I'll only enter if there's additional support from price, like a resistance turned support. Never 50% alone.

Thanks for the research bro.
  • #17
  • Dec 8, 2007 8:52am Dec 8, 2007 8:52am
Here...

this thread is only scratching the surface of fib's

http://www.goldenratio.org/info/
  • #18
  • Dec 8, 2007 9:25am Dec 8, 2007 9:25am
And here's an interesting read for those wondering if there's anything to fib levels and trading

http://epublications.bond.edu.au/cgi...=business_pubs
  • #19
  • Dec 8, 2007 9:53am Dec 8, 2007 9:53am
Why do traders fail??????
Because of nit picky crap like this that just doesn't matter in the end.... just use 25, 50, and 75 and life is grand
Fib numbers are not magic numbers.
Same Whore .... Different Dress
  • #20
  • Dec 8, 2007 10:26am Dec 8, 2007 10:26am
Instead of dividing it into quarters .25 go with eighths .125.

Basis is an octave scale a.b.c.d.e.f.g.a to come full circle in an octace is 8 notes, or 13 steps if you count notes (8) and the flats (5).

Hummmm fib numbers???????

Alot of traders just look at the quarter percentages, in depends on one's trading foundation, Gann placed a lot on harmonics.

My question is why round when you can chart exactly, the spread on larger weekly, monthly charts can be big.
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