Vegas Tunnel & Fibonacci Numbers

Good day everybody!

I just found this site and wish to say WOW! What an excellent resource for the budding Forex enthusiast!!

In searching for a system or two to 'play with', I read through Vegas' Tunnel and have a question that I hope somebody can answer - how do the Fibonacci numbers as shown (the "numbers of interest" being 55, 89, 144, 233, and 377) apply to the actual charting process? I have a rudimentary understanding of Fibonacci and definitely see how it can show areas of resistance & support, but most charting software shows quite differently (38.2, 50, 61.8, etc...) - how do these correlate??

Thanks for any help, and happy trading!

D.

Thanks for the reply eastmeals!


I looked through the posts indicated but still didn't see how those numbers applied to an actual chart. I then re-read the Vegas Tunnel system and worked through the examples he shows. I now realize that those numbers are directly related to PIPs and not some sort of support/resistance areas (aka the ratios as I was supposing). Once the chart has changed by 55 pips from the tunnel center, sell/buy off a portion (one fifth?), then once you hit 89 do same, etc up to 377 where you should sell/buy remainder if you have any left.

This makes a lot more sense now! Thanks again for those links - I assumed the numbers had more of a direct relation to the ratios for the purposes of charting. I now have a better understanding of fibs in general...

Take care & happy trading!

D.

i think those fib ratio is different from the fib number of interest which are lines graphed x-number above and below the 28ema line where x is the fib number

The root base of a Fibonacci sequence is that the Next Number in the series is = to the Sum of the Previous 2 Numbers.

Fibonacci started his series with 2 Ones. 1 , 1

So we get the next number in the series by adding the previous 2 together.
1 + 1 = 2
Now we have 1 , 1 , 2
Next Number = 2 + 1 = 3

Continuing with the same progression we get;

1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377,
{Next Number = 377 + 233} ad-infenitum.

These numbers are then Plotted as Pips Added/Sutracted to/from the MA.

{MA+144 pips, MA-144 pips}

The Numbers you are used to are a further calculation derived from "The Golden Ratio" which is attained by Dividing any number in the Series above by the number immediatly before it.

34/21 = 1.619
377/233=1.618
55/34 = 1.617

If you take 100% of a previous Price move {High to Low} and divide it by 1.617, you get,
61.8% of that Price move
If you then Divide 61.8% by 1.617 {The Golden Ratio} you get,
38.2%

Hope it helps.

Thanks guys! The mud puddle is just starting to clear - a bit anyways...

I've been reading the huge chart thread devoted (mainly) to James16. I think I'll be clearing all of my templates and starting fresh!

Thanks again!

D.