Fibonacci #`s & Ratios

Report
Learn To Trade Class #3
Plan Your Trade, Trade Your Plan
“Fibonacci Ratio Analysis with Elliott Wave”
1.618
Today we will learn how to combine Fibonacci
Ratio Analysis with EW for trading entries and exits.
We will begin at 7:30 PM ET – You will hear no sound until we start
Fibonacci
“How many pairs of rabbits placed in an
enclosed area can be produced in a single
year from one pair of rabbits if each pair
gives birth to a new pair each month
starting with the second month?”
- Elliott Wave Principle
Fibonacci Pisano Bigollo (“Leonardo Fibonacci”) circa 1170 to 1250
discovered the Fibonacci sequence by breeding rabbits.
Fibonacci #’s & Ratios
The Fib sequence each # is the sum of the two #’s preceding it,
starting with 0 and 1.
- 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, etc.
“God does not play dice with the universe.”
- Albert Einstein
Golden Ratio
FIBONACCI
1.000
0.618
FIBONACCI
0.382
0.618
Fibonacci
0.382
0.618
Fibonacci #’s & Ratios
Fibonacci #’s & Ratios
The Fibonacci Sequence
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, etc
Fib retracement ratios are the ratio of any # to it’s next higher #.
Example : 0/1 = 0 (Starting Point)
Example : 1/1 = 1 (Ending Point)
Example : 1/2 = 0.50 (Major retracement level)
Fibonacci #’s & Ratios
The Fibonacci Sequence
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, etc
Fib retracement ratios are the ratio of any # to it’s next higher #.
Once we cross the fourth set of fib #’s the ratios start to narrow
down to the inverse of the Golden Ratio – 0.618
Example : 2/3 = .6666
3/5 = .6000
5/8 = .6250
8/13 = .6153
13/21
21/34
34/55
55/89
= .6190
= .6176
= .6181
= .6179
89/144
144/233
233/377
377/610
= .6180
= .6180
= .6180
= .6180
Fibonacci #’s & Ratios
The Fibonacci Sequence
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, etc.
Extension Ratios
1.236, 1.500, 1.618, 2.0, 2.618
Derive Fib Extension levels by taking the ratio of any # to its next
lower #. The sequence narrows down to the Golden Ratio – 1.618
Example : 1/0 = 0
1/1 = 1
2/1 = 2.000
3/2 = 1.500
5/3 = 1.666
8/5 = 1.600
13/8 = 1.625
21/13 = 1.615
34/21
55/34
89/55
144/89
= 1.619
= 1.617
= 1.618
= 1.618
Fibonacci #’s & Ratios
2.00
1.618
0.00
0.382
0.50
0.618
100.0
External Retracements
Expansions
-For exits on trend trades
-For entries on counter trend trades
Retracements
-For entries
Fibonacci Retracements
Retracements ratio’s are
used to analyze
corrective Waves
38.2%
…. by measuring
previous motive waves
61.8%
100%
100%
Fibonacci Retracements
+ Helps determine the
completion of a
Correction
+ Serves as potential Entry
levels for trades in the
direction of the larger
trend
Key Ratios
˃ 23.6%
˃ 38.2%
˃ 50.0%
˃ 61.8%
˃ 78.6%
Fibonacci Retracements
5
0.00
3
B
0.382
4
1
0.50
A
0.618
C
2
0.786
100.0
Retracements for Entry
1. Identify a completed
5-wave impulse & anticipate
a 3-wave correction
2. Measure impulse wave
to define retracement levels
3. Watch for the end of
correction for entry
Motive Waves Already
Completed
»
»
»
»
Wave 1
Wave 3
Wave A
Wave W
Corrective Waves To Study
With Retracements
»
»
»
»
Wave 2
Wave 4
Wave B
Wave X
Motive Wave Tip
Quickly access the
Trading Analysis
Fib ratios within
the wave count
Motive Wave Tip
Access the default
Fib ratios from the
components panel
External Retracements
127.2%
261%
Ext. Ret. ratio’s are
used to analyze motive
waves
…. by measuring
previous corrective
waves.
External Retracements
+ Helps determine the
completion of a motive
wave
+ Serves as potential Exit
levels for trades in the
direction of the larger
trend
+ Serves as potential entry
for contra-trend trades
Key Ratios
127.2 %
161.8 %
200.0 %
261.8 %
423.6%
External Retracements
2.00
1.618
3?
1.272
5
1
3
1.00
B
2
1
4
2
0.618
0.000
A
Extensions for Exit
1. Identify a completed
correction & anticipate a
new impulse wave
2. Measure corrective wave
to define extension levels
C
3. Watch for the end of
correction for entry
Corrective Waves Already
Completed
»
»
»
»
Wave 2
Wave 4
Wave B
Wave X
Motive Waves To Study
With Extensions
»
»
»
»
Wave 3
Wave 5
Wave C
Wave Y
Motive Wave Tip
Quickly access the
Trading Analysis
Fib ratios within
the wave count
Motive Wave Tip
Access the default
Fib ratios from
the components
panel
Fibonacci Expansions
200%
Expansions are
used to measure motive
waves
…. by measuring
previous motive &
corrective waves.
Fibonacci Expansions
+ Helps determine the
completion of a Motive
wave (W.1,3,5,A or C).
+ Serves as potential Exit
levels for trades in the
direction of the larger
trend, or entry levels
against the trend.
+ Serves as potential entry
on counter-trend trades
Key Ratios
38.2 %
61.8 %
100.0 %
161.8 %
200.0 %
261.8 %
423.6%
Fibonacci Expansions
1.618
1.000
0.618
5 Click 2
3
1
4
2
Click 1
B
Click 3
A
C
0.000
Expansions for Exit
1. Identify a completed
Motive & Correction &
anticipate a new 5-wave
motive.
2. Measure (click) the 3
end points of the Motive
& Corrective Wave.
3. Watch for the end of
the Motive wave at
Expansions ratios for exit.
Corrective Waves Already
Completed
»
»
»
»
»
»
Wave 1,2
Wave 3,4
Wave 1-3
Wave A,B
Wave W,X
Any 2 adjacent waves
in a triangle
Motive Waves To Study
With Extensions
»
»
»
»
»
»
Wave 3
Wave 5
Wave 5
Wave C
Wave Y
Waves C, D, E
Motive Wave Tip
Quickly access the
Trading Analysis
Fib ratios within
the wave count
Motive Wave Tip
Access the default
Fib ratios from
the components
panel
» A Fib zone is at least two Fib ratios in close
proximity to each other
» Combine all Fib tools: retracements,
extensions & projections to calculate a Fib
Zone
» F.S.Z = Fib Support Zone – with a completed
wave pattern, these are buying opportunities
» F.R.Z = Fib Resistance Zone – with a completed
wave pattern, these are selling opportunities

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