The Art of Fibonacci Trading

The Art of Fibonacci TradingPresented by Aditya & Gema

Known as : Leonardo Pisanus Leonardus filius Bonacci Leonardus Bigollus

“Bigollo” – Tuscan dialect – meaning “blockhead” or “traveller”Never referred to himself as “Fibonacci”Medieval biographies and portraits rare: All pictures and statues of Leonardo of Pisa are only from artists’ imaginationsExact date of birth and death not known

Background HistoryLeonardo was born 2 centuries after cultural and

economic slowdown in Europe known as Dark Ages

Commercial Revolution was well underwayBoth local and international trade occurredMediterranean Sea linked regions representing

different religions, political entities and culturesThree Italian cities dominated imports and

exports: Venice, Genoa and PisaPisa: population of approx. 10,000 and was a

“commune” – independent republic

More History… His father, Giuliemo, held a diplomatic post in Bugia

(North Africa) Leonardo travelled extensively with his father: Egypt,

Syria, Constantinople, Sicily, France, Greece Leonardo acquired much knowledge of various

mathematical systems and texts during his travels Some argue he is not a true mathematician but only an

author of a very successful text (Liber Abaci) Yet, he did also compile his own techniques, theorems

and facts when he published his findings When we think of Fibonacci, we think of his introduction

on the Hindu-Arabic numerals (HAN) to the Western world and the famous Fibonacci sequence

MORE ABOUT FIBONACCI

• Fibonacci is one of general revelation from God to mankind that gave amazing contributions to science and a lot of life aspects

• More about Fibonacci can be seen at www.goldennumber.net

1. The Miracle2. The Psychology of Golden Ratio3. Fibonacci retracement4. Fibonacci expansion5. Retracement Vs Expansion6. The power of 61.87. Basic of Elliot Wave Analysis8. Aplying Elliot Wave Analysis & Fibonacci9. Entry & Exit Rules 10. Identifying Divergence.11. Aplying divergence, fibonacci & wave analysis

Special Thanks to:

• Mr. Mochammad Yusuf (Chairman Asosiasi Analis Teknikal Indonesia)

• Mr. Imran S. Dalimi• Mr. Cornelius Luca (Market

Technician Association)

Percentage retracements

• All trends are subject to price retracements and reversals.

• Trend analysis should help you identify trend reversals.

Bullish Trend

- Dikatakan Bullish jika harga membentuk pola HH (higher high) dan HL (Higher Low) dimana harga selalu membuat new high. Jika terjadi koreksi/penurunan tidak pernah melampaui harga low dari koreksi sebelumnya

Bullish Trend

HH

HH

HH

HH

HL

HL

HL

HL

HL

Bullish Reversal Point

HH

HH

HH

LHLH

LL

HL

HL

HL

HL

LL

Reversal Point

Note: Reversal point ketika harga menembus trough sebelumnya

Bearish Trend

- Dikatakan Bearish jika harga membentuk pola LH (Lower High) dan LL (Lower low) dimana harga selalu membuat new Low. Jika terjadi koreksi/Kenaikan tidak pernah melampaui harga high dari koreksi sebelumnya

Bearish TrendLH

LH

LH

LH

LL

LL

LL

LL

LL

Bearish Reversal Point

LL

LL

LLHL

HL

LH

LH

LH

HH

Reversal Point

Note: Reversal point ketika harga menembus peak sebelumnya

SidewaysHH

HL HL

HL

HLHL

Kondisi sideways biasanya ditandai dengan terbentunknya “Chart Pattern”

Fibonacci Ratio

• Angka Fibonacci: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, ….

• Didapat dari menjumlahkan 2 bilangan sebelumnya

• Golden Ratio (1.618) didapat dengan membagi angka setelah deret ke 13 dengan angka sebelumnya

233/144 = 1,618377/233 = 1,618610/377 = 1,618

Fibonacci Sequence and Ratio

1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144,

233, 377, 610, 987, 1597, 2584, 4181, (etc.)

5 - 1

2 = 0.6180339887499..

Golden Ratio

Retracement Analysis

Obvious Not obvious

Percentage retracements

Fibonacci ratios .146 = (-3√5 + 7)/2 .236 = .6183 (or .618*.382).382 .5 (not really) .618 .786 = √.618.854

Fibonacci Retracement

Jika Market Bearish angka 0 ditempatkan di Low dan angka 100 ditempatkan di harga High.

Posisi yang diambil adalah sell ketika menyentuh retracement 2/3 atau 66

Sell

Fibonacci Retracement

Jika Market bullish angka 0 ditempatkan di high dan angka 100 ditempatkan di harga lowPosisi yang diambil adalah sell ketika menyentuh retracement 2/3 atau 66

Buy

Applying Fibonacci

Chart © 2008 Finance Chart

Chart © 2008 Finance Chart

Applying Fibonacci

Chart © 2008 Finance Chart

Applying Fibonacci

Chart © 2008 Finance Chart

Applying Fibonacci

Chart © 2008 Finance Chart

Applying Fibonacci

Chart © 2008 Finance Chart

Applying Fibonacci

Chart © 2008 Townsend Analytics Ltd.

Applying Fibonacci

Chart © 2008 Townsend Analytics Ltd.

Applying Fibonacci

Chart © 2008 Finance Chart

Applying Fibonacci

Chart © 2008 Finance Chart

Applying Fibonacci

Chart © 2008 Finance Chart

Applying Fibonacci

Golden ratios of multiple moves

The retracementsof an initial trendremain in effect for as long as the original high and

lowremain in effect.

Fibonacci retracements (monthly)

Fibonacci retracements (weekly)

Fibonacci retracements (daily)

Fibonacci retracements (hourly)

Multiple Fibonacci retracements

Extensions

When a rebound from

retracement of a previous

trend exceeds the previous

high (in an uptrend) or low

(in a downtrend), erase the

old retracements and

apply extensions.

• Retracement ratios are equally valued for targeting prices on extensions.

• In the case of the Gann ratios, the extensions will be placed at: 1.125, 1.25, 1.375, 1.5, 1.625, 1.75 and 1.875.

• In the case of the Fibonacci ratios, the extensions will be placed at: 1.382, 1.5 and 1.618.

Extensions

Extensions – USD/BRL

Extensions

Extensions

Extensions

Fibonacci Multipliers

• Fibonacci divisions are divisions of 1.• Fibonacci expansions are Fibonacci ratios, which when

multiplied equal 1.– .236 * 4.236– .382 * 2.618– .5 * 2– .618 * 1.618– .764 * 1.309

Fibonacci Multipliers Application

• Assume B-A = .382 • Multiplier of .382 = 2.618• If B-A = 100 points, then the

target becomes 261.8 • Add 261.8 to A• The target is very

aggressive B

C

A

Fibonacci Multipliers Example

Extend in the Direction of Trend

Fibonacci Multipliers

• Primary Ratios– # * 1.618– # * 2.618

• Secondary Ratios– # * 1.309– # * 2– # * 4.236

Extend Retracement from Pullback

C to D = (B – A) *.618

or 1 or 1.618

Long-term targets

A

A

B

B

D

D

C

C

Extend Retracement from Pullback

Fibonacci Multipliers

• Primary Ratios– # * 1.309– # * 2– # * 4.236

• Secondary Ratios– # * 0.382– # * 0.5– # * 2.618– # * 4.236

Fibonacci Time Extensions

Fibonacci Time Extensions

Fibonacci Time Extensions

The power of retracement 2/3(Bullish)

The power of retracement 2/3(Bearish)

Skenario: Sell 1 lot di retracement 66. Sell double cover (2lot) di Retracement 100

1 lot di likuidasi di retracement 66 1 lot di hold sampai retracement 0 (Take profit

Oscillator Indicator

• Relative Strength Index (RSI)• Stochastic Oscillator • Williams % R

Oscillator Signal

• Overbought / Oversold• Crossover Signal• Convergence & Divergence

Overbought / Oversold

Overbought / Oversold

Crossover Signal

Crossover Signal

Divergence

How to Trade Divergences

www.babypips.com

Regular Divergence

Hidden Divergence

Rules For Trading Divergence

Rules For Trading Divergence

Rules For Trading Divergence

Rules For Trading Divergence

Rules For Trading Divergence

Rules For Trading Divergence

Rules For Trading Divergence

Rules For Trading Divergence

Divergence Cheat Sheet

Divergence Cheat Sheet

DIVERGENCE CLASSDIVERGENCE CLASS

Types of Divergences

Divergences, whether bullish or bearish in nature, have been classified according to their levels of strength.

The strongest divergences are Class AClass A divergences;

The medium are Class B divergences; and

The weakest divergences are Class CClass C.

The best trading opportunities are indicated by Class A divergences, while Class B and C divergences represent choppy market action and should generally be ignored.

CLASS A DIVERGENCECLASS A DIVERGENCE

• Class A bearish divergences occur when prices rise to a new high but the oscillator can only muster a high that is lower than exhibited on a previous rally. Class A bearish divergences often signal a sharp and significant reversal toward a downtrend.

• Class A bullish divergences occur when prices reach a new low but an oscillator reaches a higher bottom than it reached during its previous decline. Class A bullish divergences are often the best signals of an impending sharp rally.

CLASS B DIVERGENCECLASS B DIVERGENCE

• Class B bearish divergences are illustrated by prices making a double top, with an oscillator tracing a lower second top.

• Class B bullish divergences occur when prices trace a double bottom, with an oscillator tracing a higher second bottom.

CLASS C DIVERGENCECLASS C DIVERGENCE

• Class C bearish divergences occur when prices rise to a new high but an indicator stops at the very same level it reached during the previous rally.

• Class C bullish divergences occur when prices fall to a new low while the indicator traces a double bottom. Class C divergences are most indicative of market stagnation - bulls and bears are becoming neither stronger nor weaker.