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Attachments: What's really behind fib levels?
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What's really behind fib levels?

W.D. Gann came up with the 50% retracement idea. He came up with his own insights while Elliot and others started to look at Fib levels for trading. Over time, the some of Gann's ideas have been merged with Fib levels in many trader's tooboxes.



Quoting Akuma99
I hear the counter-argument constantly about fibonacci numbers that they are in essence just a self fulfilling prophecy and actually has nothing to do with the mathematical basis behind the numbers at all. The 50.0 level is an example of that, from what I understand this is not a fibonacci level at all yet is respected constantly.

Here is my point though, it is true im sure that fibonacci levels are more powerful due to the fact that so many follow them, hence validating them. Essentially I could assign a Akuma sequence of 1,5,33,2,34 and claim that it has some underlying mathematical meaning from the egyption pyramids, and if enough people believe it, then we start seeing price reacting to the levels, however if I did do that tomorrow, do you think anyone would follow? .. of course not, as when most people are told something, they will check the chart for the last few days minimum, see if anything happened at those levels and make their decision accordingly. A week of losing trades and it would be in the bin quicker than I could type the numbers in the first place.

Obviously the fibonacci sequence was introduced at some point into the trading arena, would they not have followed the same path as the Akuma sequence if there was no foundation to them at the time of introduction?

Mike seems to be coming at it from a slightly different angle, which is exactly what can give a trader the edge they need. More power to you ... can I come along for the ride?
Quoting diallist
If you take a woman's height and divide it by the distance her belly button is above the ground and then take the average of this ratio for a large set of women, it comes out very close to the golden ratio.
man i really hope you figured this out through hands on experience!! you pimp!
Relax and be happy.
Quoting merlin
man i really hope you figured this out through hands on experience!! you pimp!
Ya I'm sure that's a hit with the ladies. "Come back to bed Dialist, hold on can't find my sqaure and plum bob." I guess it works well with those questionable women you meet sometimes, "Yup that's close enough, you're a women."
I bet that doesn't get many second dates...




Quoting merlin
man i really hope you figured this out through hands on experience!! you pimp!
[quote=diallist

Here's a "golden ratio" tidbit! If you take a woman's height and divide it by the distance her belly button is above the ground and then take the average of this ratio for a large set of women, it comes out very close to the golden ratio. For some reason, this doesn't work on men.

Dial[/QUOTE]

Among the plethera of Fib Ratios discussed in Nature and in particular the Humans, is that the human Face is very close also. Length of nose, distance between eyes, Height of forehead etc... etc...

In fact, there is a belief that the Mona Lisa {in my opinion she is not beutifull} is so attractive because the ratios are exact.

B
I can't believe I never found this thread!

The fact is that the traditional way of applying Fibonaccis cannot work all of the time, because the application points are arbitrary. Sometimes they'll be the right points, and sometimes they won't.

The Absolute Fibonacci, on the other hand, can be set up once, and you can simply watch as the candlesticks stick to it.
The framework is there; we just have to work on our frame of mind.
Quoting niceguy777
I can't believe I never found this thread!

The fact is that the traditional way of applying Fibonaccis cannot work all of the time, because the application points are arbitrary. Sometimes they'll be the right points, and sometimes they won't.

The Absolute Fibonacci, on the other hand, can be set up once, and you can simply watch as the candlesticks stick to it.
But this is what I'm talking about: This only happens during expansion right? Does it apply to simply price motion as in a trend? It can't, because the exponential rate can't be sustained for long. This is what I'm getting at. I'd like to see a chart of this Fib-Candle-Sticking
Quoting hagadol
Intersting Fib Article (Attached)
I like what I've read so far, I have some opinions about this and the other article.
I just had another idea. Since volatility has no direction, maybe fib levels and the golden ratio are better applied to bull/bear population. I keep seeing volatility expansions that change direction every other bar. I'm thinking of ways the fib levels can be used to predict direction. It would be cool to take one of those tiny daily indecision bars and analyze it at the 5-minute level to get a full prediction of further growth and movement.
Quoting Mike Jolley
I just had another idea. Since volatility has no direction, maybe fib levels and the golden ratio are better applied to bull/bear population. I keep seeing volatility expansions that change direction every other bar. I'm thinking of ways the fib levels can be used to predict direction. It would be cool to take one of those tiny daily indecision bars and analyze it at the 5-minute level to get a full prediction of further growth and movement.
I have also thought about applying Fib to Traders rather than Price Data.

I think it can be done but probably s/b applied to COT Futures to allow for the difference in Size of the Bull/Bear. {Hereford/Brahma. Koala/Grizzly}
{I know I know a Koala is not actually a bear.}
Quoting Mike Jolley
But this is what I'm talking about: This only happens during expansion right? Does it apply to simply price motion as in a trend? It can't, because the exponential rate can't be sustained for long. This is what I'm getting at. I'd like to see a chart of this Fib-Candle-Sticking
Here's one for the USD/JPY last Friday. You don't get the whole picture from just one chart, but I think you can get the idea here.

You can get a lot of information by applying the Absolute Fibonacci (my invention! ). I, for instance, have been able to predict with accuracy, points as many as 200 pips away from the action, and sometimes in the opposite direction to the current trend. It makes life very simple. For instance, there was a strong indication on the 27th April that the USD/JPY would hit 112.33 in the near future. That precise point is on the framework. So even if it only touched that point for a few seconds, as long as you'd set yout limit there, you'd have got the trade.

By the way, that's the first low point on this example.
Attached Image
The framework is there; we just have to work on our frame of mind.
ANd on the Canadian this morning.....
Attached Image
The framework is there; we just have to work on our frame of mind.
On the one hour chart that move looked like this:
Attached Image
The framework is there; we just have to work on our frame of mind.
...and on the 4 hour, that same chart would show a nice bullish pin => price action confirmation.
Quoting bluemeasure
...and on the 4 hour, that same chart would show a nice bullish pin => price action confirmation.
Yes, doesn't it!

Have you checked the LBT group this morning?
The framework is there; we just have to work on our frame of mind.
Yes, I have, thanks very much for your lengthy response . It appears the GBPUSD is seeing similar action to what you've described above (based on the 146). It will be interesting to see how it plays out, ie. whether this is a temporary correction or not. The question is can the downward momentum be sustained to 1.8519 or so if I'm reading the chart right.
Quoting Bemac
Among the plethera of Fib Ratios discussed in Nature and in particular the Humans, is that the human Face is very close also. Length of nose, distance between eyes, Height of forehead etc... etc...

In fact, there is a belief that the Mona Lisa {in my opinion she is not beutifull} is so attractive because the ratios are exact.

B
But of course we all know that Mona was just Lenoard Vencent in drag.

Oh! on the duck thing. It is the same reason that there are wingtip winglets on my gulfstream: vortex relief.
Nolite dormiens pungere ursum. -- Latan Proverb.
Quoting bluemeasure
Yes, I have, thanks very much for your lengthy response . It appears the GBPUSD is seeing similar action to what you've described above (based on the 146). It will be interesting to see how it plays out, ie. whether this is a temporary correction or not. The question is can the downward momentum be sustained to 1.8519 or so if I'm reading the chart right.
Bearing in mind our other discussion, I'd be a bit nervous about that!

This could get annoying for others. Shall we revert to our private discussion on the LBT group!?
The framework is there; we just have to work on our frame of mind.
Quoting MrWhipple
But of course we all know that Mona was just Lenoard Vencent in drag.

Oh! on the duck thing. It is the same reason that there are wingtip winglets on my gulfstream: vortex relief.
I'd have to do some more research on the subject but reading through the B W I L C book heard (i "read" the PDF file via a nice UK english female voicewith a pillow speaker under my pillow at night : ) that Leonardo Pisano, the founder of the FIBO numbers did an experiment on pigs (read this article one of many on the subject but graphicaly interesting and a bit humorous) The B W I L C point to the FIBO number thingy was why should we base our trading on such? As some of you might know from my prior posts I LUV FIBO #s, so even if they might have been first discovered while raising pigs, they sure seem to work much of the time.

Many of my favorite trades were bounces off the 61.8% FIBO back in the direction of the overal trend. . . it's one of my favorite FIBO-trades.
Thom
Hello,

I find that fib levels have the best chance of holding if they are based on weekly or monthly charts.

A fib level is not a guarantee of support or resistance, but on most occasions, price action will pause at that level before turning around or resuming in the current direction.

Fib levels are also great for finding levels to take profit at.

A great link is http://www.fibmarkets.com/
Neil Hughes posts online videos of his use of fibonacci.

Coder
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