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.
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?
