How good is Fibonacci?

1
Please read first my post before commenting things like "It's no HG at all!!!11" or other stupid one-liner. Who can read and calculate is clearly at an advantage. THX

FX is a numbers game: Risk/Reward, expectations in %, prices and values, round numbers and Pivots as Sup/Res just to call a few - everywhere numbers, but when it comes to Fibonacci, there are many beginners who say that it is useless, hocus-pocus or a in the best case a self-fulfilling prophecy. As evidence you always hear: "When you draw it on a given chart, you will ever find something, but you can't use it live."
On the first glance it may be right, but the point is Fibonacci is used in many approaches that professionals use like simple Sup/Res drawing, target identification in Elliot Waves theory and Market Profiling and in Harmonic Patterns, anyway. Imagine the indices like DOW and DAX building all-time Highs one after another. How you can know to which new all-time-high-point the trend is likely to go? Projections? They are also based on Fibonacci. How can EW-users can predict the target impulse wave 3, 5 or C and this often on the point? I mean no guessing or huge zone, but really small zones for TP and reverse for SL? Yes, Fibnacci and nothing else. If you want also combine it with Pivots and round numbers (Murray Math I haven't tried). Please also read here: http://www.investopedia.com/articles/trading/05/advfibonacci.asp

Fibonacci Levels

Which are the Fibo-Levels we need (which the market reacts to)? Surely, there are some, but we need only the important ones:
  • 0.236 (nt/nt+3),
    0.382 (nt/nt+2),
    0.618 (nt/nt+1),
    0.786 (=sqrt(0.618)),
    1 (nt/nt), ;)
    1.272 (=sqrt(1.618)),
    1.618 (nt+1/nt),
    2.618 (nt+2/nt),
    4.236 (nt+3/nt),
and the levels related to 2:
  • 0.5,
    1.414 (=sqrt(2)),
    and 2.
nt is a given Fibo number and nt+x the xth next number in the fibo series:
1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2586 ...

Image

You see the symmetry in the Fibo ratios? That's why I don't use numbers like 0.764 (=1-0.236) or 0.854 and also because off the market reactions fit less to them. The number two is also an important number in the markets, see Ocean indicators, therefore.

Fibonacci clusters

The market moves harmonically, so you find Fibo levels are everywhere. For finding Sup/Res zones one Fibo retracement isn't that purposeful (we all know that), so let's use two and three different ones. Where two or three levels of these retracements lying narow together we have a cluster. Different traders may see different things going on on the chart. These clusters are very likely the intersections of the most traders and therefore represent heavy obstacles. Pure coincidence? Try it forward and backward.
Now merge them to zones. One other point for those who say markets walk randomly (RNG): Draw those Fibo cluster zones back in history (as far as you can, maybe till the year 1997) and see what we have there. You may be flabbergasted.

I must confess I'm no fan boy, but one who see it more as a self-fulfilling prophecy. In this point I'm pragmatic and democratic and what works obviously very good and has high synergy to my other stuff I take into my system.
These users thanked the author Krelian99 for the post:
Jedidiah


Re: How good is Fibonacci?

3
Krelian99 wrote: Sun Sep 10, 2017 11:31 pm I use these zones intraday on M30 and trade on M5. All of these zones where drawn with Fibo retracements on M30 from March till May 2017 (the uptrend) and are only expanded forwards now, no editing or anything. I'm always astonished how accurate this is.


Zones GBPAUD M30.png
Hi Krelian
So much thanks for describing in details your analysis and sharing experience that is a long years study and experimenting mostly traders are not aware of and as a results thing alike this,goes through over their heads but for those who look in with deep interest and use their intellectual worth for them
carry on plz
regards
Indicator is just a tool.

Use it only if it can benefit you. Leave it if you don't know how to use it optimally.

Re: How good is Fibonacci?

4
:thumbup: Nice mr. Krelian,
This topic really helps a new fesher how to use.. A special thanks for your details and calrificaiton and STUDY class given to me through PM, this will help me to develop and update in BO strategy. Kindly keep suport ..
"There is NO GOD higher than TRUTH" - Mahatma Gandhi

Re: How good is Fibonacci?

5
I noticed if people didn't already work with Fibo it could be irritating and for you I recommend an introduction video of Fibo retracements.

Thanks Sal. Play a little bit and get familiar with Fibo levels. The 0.618 retracement is very often taken.

Now you can watch this vid. It's about my first post how to find the clusters. It's not that difficult, but it helps when you see the search once in action.


Have fun
These users thanked the author Krelian99 for the post:
Jedidiah


Re: How good is Fibonacci?

9
The Law of Nature - Digital Model?

Why are human fingers 5 on the left and right? Time in decimal? And computers use 0, 1 binary?


chatGPT:

The reason why human fingers are 5 left and right is not based on some numerical model, but is the result of evolution. Humans have gradually developed five-fingered hands and five-toed feet over a long evolutionary process, which helped humans better use tools and walk. Similarly, the origin of the 60 decimal system of time is not based on some numerical model, but on the hexadecimal notation created by the ancient Babylonians.

The reason why the computer uses 0 and 1 binary is because the computer uses an electronic switch, which can only represent the on and off states separately. Binary is a two-state digital system that can be conveniently used to represent data inside a computer. In addition, binary is also mathematically simple and reliable, so it is widely used in computer science and electronic engineering.


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