“fibonacci ratio analysis with elliott wave” today we will learn how to combine fibonacci ratio...

“Fibonacci Ratio Analysis with Elliott Wave”

Today we will learn how to combine FibonacciRatio Analysis with EW for trading entries and exits.

1.618

Learn To Trade Class #3Plan Your Trade, Trade Your Plan

We will begin at 7:30 PM ET – You will hear no sound until we start

Fibonacci Pisano Bigollo (“Leonardo Fibonacci”) circa 1170 to 1250

discovered the Fibonacci sequence by breeding rabbits.

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 #’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

1.618Golden Ratio

1.000 0.618

FIBONACCI

FIBONACCI

0.382 0.618

0.382

0.618

Fibonacci

Fibonacci #’s & Ratios

Fibonacci #’s & RatiosThe 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 & RatiosThe 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 = .6190 21/34 = .617634/55 = .618155/89 = .6179

89/144 = .6180 144/233 = .6180233/377 = .6180377/610 = .6180

Fibonacci #’s & Ratios

The Fibonacci Sequence0, 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 = 1.6668/5 = 1.60013/8 = 1.62521/13 = 1.615

34/21 = 1.61955/34 = 1.61789/55 = 1.618144/89 = 1.618

Fibonacci #’s & Ratios

0.00

0.618

0.50

100.0

0.382

2.00

1.618

Retracements -For entries

External RetracementsExpansions-For exits on trend trades-For entries on counter trend trades

Retracements ratio’s areused to analyze corrective Waves

100%

61.8% 100%

38.2%

…. by measuringprevious motive waves

Fibonacci Retracements

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%

0.00

0.618

0.50

100.0

0.382

0.786

1. Identify a completed 5-wave impulse & anticipatea 3-wave correction

Retracements for Entry

2. Measure impulse waveto define retracement levels1

2

3

4

5

A

B

C3. Watch for the end of correction for entry

Fibonacci Retracements

Motive Waves Already Completed

Corrective Waves To Study With Retracements

» Wave 1» Wave 3» Wave A» Wave W

» Wave 2» Wave 4» Wave B» Wave X

Retracements

Retracements Motive Wave TipQuickly access the Trading Analysis Fib ratios within the wave count

Retracements Motive Wave TipAccess the default Fib ratios from the components panel

Ext. Ret. ratio’s areused to analyze motivewaves

…. by measuringprevious corrective waves.

261%127.2%

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 Ratios127.2 %161.8 %200.0 %261.8 %423.6%

External Retracements

2.00

1.00

1.272

0.000

1.618

0.618

1. Identify a completedcorrection & anticipate anew impulse wave

Extensions for Exit

2. Measure corrective waveto define extension levels1

2

3

4

5

A

B

C

3. Watch for the end of correction for entry

1

2

3?

External Retracements

Corrective Waves Already Completed

Motive Waves To Study With Extensions

» Wave 2» Wave 4» Wave B» Wave X

» Wave 3» Wave 5» Wave C» Wave Y

Ext. Retracements

External Retracements Motive Wave TipQuickly access the Trading Analysis Fib ratios within the wave count

External Retracements Motive Wave TipAccess the default

Fib ratios from the components

panel

Expansions areused to measure motivewaves

…. by measuringprevious motive &corrective waves.

200%

Fibonacci Expansions

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 Ratios38.2 %61.8 %

100.0 %161.8 %200.0 %261.8 %423.6%

1

2

3

4

5

A

B

C

Fibonacci Expansions

1. Identify a completedMotive & Correction &anticipate a new 5-wavemotive.

Expansions for Exit

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.

Click 1

Click 2

Click 3 0.000

0.618

1.000

1.618

Corrective Waves Already Completed

Motive Waves To Study With Extensions

» Wave 1,2» Wave 3,4» Wave 1-3» Wave A,B» Wave W,X» Any 2 adjacent waves

in a triangle

» Wave 3» Wave 5» Wave 5» Wave C» Wave Y» Waves C, D, E

Expansions

Expansions Motive Wave TipQuickly access the Trading Analysis Fib ratios within the wave count

Expansions Motive Wave TipAccess the default

Fib ratios from the components

panel

Building A Fib Zone

» 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

Building A Fib Zone