Fibonacci ret.

Hi

Is there any statistics when retracements happend in a trend? What is the most common retracement? Is ist 50%, 38,2???

Hello cantona...

I heard that it retraces mostly at 38.2...

I have made some studies about fibos, we know that fibo retracements depend on the fibonnaci series.


1,1,2,3,5,8,13,21,34,55,... , (in a mathematical form: (i=(i-1)+(i-2)), where (i) is the order of any number in the series).


Now, calculate (21/34) or (13/21) or, .....; You always get the ratio (61.8%) and as you go further in the series the ratio gets more accurate. (In a mathematical form: ( (i-1) / i ) = 0.618)).


to summarize the rest of fibo ratios:

(i-1) / i = 0.618 = 61.8%
(i-2) / i = 0.382 = 38.2%
(i-3) / i = 0.236 = 23.6%
(i-4) / i = 0.146 = 14.6%
(i-5) / i = 0.09 = 9%


I've found the ratios 14.6% and 9% to be reliable on the shorter term, -although they are rarely used-, while the 50% ratio is not a fibo, -but often used by traders-.

The fibos are a very good tool for determining the S/R lines, but to find which is reliable and which is not, I think I haven't figured it out ...

A lot of traders who follow the Eur/Usd say that it retraces to 50% regularly.

Lou

As a general rule - the stronger the trend, the shallower the retracment.
You could even use reteacment level to determine trend strength.

SilverB

That's a very interesting statement SB. Do you have any stats on that or a link to them?

No stats. In the book 'The Harmonic Trader' the author talks about different fib levels. He decribes the shallower retracements as indicating a stronger trend.


Logic would dictate this.

1) In terms of supply/demand dynamics , the higher the demand strength, the earlier in the retracement down will buying pressure come in.

The following are not reasons why, but may be worth thinking about.

2) As price has a shorter distance to travel from shallower retracement to the high we are less likely to experience micro-trend exaustion at the point of the breakout of the high.
3)As price has fewer fib value between its retracment level and the high = less resistance levels.
4) Less chance of complex fib patterns forming such as gartleys

All of this is just ideas. Theoretically they could be tested based on historical data. i.e.probability of a successful breakout of the high/low based on retracement level.

Regards,

SilverB

Depends what kind of retracement are you talking about, but basicly theres no such thing as 50% fibo retracement, thats just a bogus nonsense. those who claim there is such thing just dont understand how that fibo thing really works.

Well, I reckon the Fibonacci is a much misunderstood idea - but one of the best (and oldest) ideas around. It just depends on how you use it. Here's a sample of the Absolute Fibonacci Framework that I discovered. It's on the CHF over the last few weeks, and I think you can clearly see that if you know how to read this, it's an amazingly powerful tool. Let me know what you think.

Hi all and greetings,

Below is a screen shot i took from my MT4 station tonight. It is i believe in the same ball park as the swissy chart in the prior post using the MT4 Fibo tool set to 14.6, 23.6, 38.2, 50.0, 61.8, 76.4, 85.4, 100 (and extensions of 1.18, 1.27, 1.618) in yellow.

In the background are gray lines drawn every +/- 30 pips beginning at 1.2300. These lines represent what is known as one-half-a-Harmonic-Beat.

What i look for in a chart once i've drawn my Beat lines and my Fibo is activity near a Beat line that coincides with a Fibo line. As you can see below, many times the Beats are a greater magnet/S/R than the Fibos.

Cheers,
Thom

http://accrete.com/fx-posts/beats-on-4hr-chf.gif