The fibonacci sonar has an internal library of price action patterns gathered from 28 symbols and 7 timeframes.
Each pattern is split to 2 sides.
The before side and the after side.
Fibonacci sonar uses the before side to recognize similar patterns.
The most recent price action (at any moment) up to the open price of the newest bar is what is used as the before side for searching the library.
The after side holds an aggregate of all activity each pattern has seen.
This is where the fibonacci term comes in.
From the open of all the instances of each pattern in the past we have deployed price levels above and below the opening price in a fibonacci sequence.
We then measured how many times a price level was reached. If you divide the number of times a price level was reached by the number of instances that exist for one individual price pattern then you can extract it as a percentage (%)
Naturally for each pattern you can imagine there is a percentage on the top fibonacci price and at the bottom fibonacci price.
That allows for a method which finds a price given a % value. For instance with this method we can ask for a level that is reached 50% of the time and the method will return a price level.
These levels are what you see on the chart. Although they are created from fibonacci price ranges that combine with their likelihood of occurrence, they do not sit at fibonacci distances from the open of each pattern.
The predetermined occurrence percentages for these levels are :
- 75%
- 50%
- 33%
- 10%
- 0%
There are 5 of those above the open price and 5 below. The levels are not symmetrical around the open price. The 75% level above might be closer than the 75% below level and vice versa. The 0% , 10% and 33% levels were added to be considered as stop loss to your existing trades.
You will also notice the lines end at certain times and don't go on forever. This occurs simply because each pattern had a limited number of candles within which it were allowed to aggregate its after side results.
If a new pattern is found and an old pattern exists then the levels of the new pattern overwrite the old. You will also notice some lines end abruptly and new ones appear.
But what about the numbers next to each level ?
These numbers , from 1 to 10 , represent the usual order each displayed level occurs in. Don't treat those as a sequence , rather the lower the number next to a price level then the earlier it might be hit. So if you believe price will go up (from your strategy) but the level with order 1 is below the opening of the pattern and the first level above the open has a 3 then that is the most likely level to be hit above the open but the sonar is telling you that usually levels 1 and 2 are hit first.
Buttons
The 3 buttons with the letters "S" "M" "L" represent 3 levels of fibonacci sonar patterns:
- Short
- Medium
- Long
The short sonar encompasses smaller more "zoomed in" price action while the long sonar has the bigger duration patterns. All 3 sonars are active all the time and you can freely switch between them.
You can also toggle visibility on and off with the eye button.
Don't treat this as a full strategy , use it for confirmation and picking levels.
Thank you for reading
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