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Technical Analysis Workshop Series
Session Seven
Fibonacci Trading – Part 1
DISCLOSURES & DISCLAIMERS
This research material has been prepared by NUS Invest.
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research material.
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contained herein is suitable or appropriate to a recipient’s individual circumstances or otherwise constitutes a personal
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change without notice.
Agenda
• Profile
• Introduction
• Who is Fibonacci and How He Can Help You with Your Trading?
• How the Ratios (Golden Ratio) Are Derived From ?
• Fibonacci Projections and Retracements
• The Relationship among the Retracement & Extension Levels
• Types of Fibonacci Price projections
• Fibonacci Analysis is a Leading Indicator
INTRODUCTION
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
Profile
FM & BC MODEL DOW THEORY
• Active member of TASS
• Graduated from NTU in 1976
• 25 years of experience
• Runs Investor’s Educational Aids, a private investors club
• Part-time Lecturer of NUS Extra-mural Studies Dept (1988
to 1994) for Forex and Derivative Products Investment
Courses
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
Introduction
FM & BC MODEL DOW THEORY
• To the Technical Trader, the chart is nothing more than what an x-ray is to a Doctor. It shows high probably of the next move in the market.
• The main reason most traders lose money in the market is they have no idea how to make sense of all that price movement:– Where should I get in?
– Where is the safest place?
– How much can I afford to risk?
– How much will I gain?
– Should I wait a little longer?
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
FIBONACCI TRADING
TECHNICAL
ANALYSISFIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
Who is Fibonacci and How
He Can Help You with Your
Trading ?
• Great mathematician
• Wrote "Libre Abaci” (Book
of Calculation)
• Introduced the numerical
numbers to the Romans
• Fibonacci Series: Each
number is the result of
adding together the
previous two numbers in
the sequence.
TECHNICAL
ANALYSISFIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
Fibonacci Series
• The Fibonacci Series goes like this... 1, 1, 2, 3,
5, 8, 13, 21, 34, 55, 89, 144, 233, 377,… etc. all
the way to infinity.
• As you can see: each number is the result of
adding together the previous two numbers in
the sequence.…1+1=2, 1+2=3, 2+3=5, 3+5=8,
5+8=13, 8+13=21, 13+21=34, etc. all the way
to infinity.
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
How the Ratios (Golden Ratio) Are
Derived From ?Prev / Last Fibonacci Series Last / Prev
1
1.0000 1 1.0000
0.5000 2 2.0000
0.6667 3 1.5000
0.6000 5 1.6667
0.6250 8 1.6000
0.6154 13 1.6250
0.6190 21 1.6154
0.6176 34 1.6190
0.6182 55 1.6176
0.6180 89 1.6182
0.6181 144 1.6180
0.6180 233 1.6181
0.6180 377 1.6180
0.6180 610 1.6180
0.6180 987 1.6180
FIBONACCI PROJECTION AND
RETRACEMENT
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
Fibonacci Projections and
Retracements
• Fibonacci price projection and retracement
methodologies will give you foresight into the
potential upcoming moves in time and price in
the market you are currently trading whether
you trade a daily chart or five-minute bars.
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
Fibonacci Projections and
Retracements• To predict where the market may go in the future. To determine
turning points in advance is important for every trader.
• Fibonacci ratios are common in almost everything in nature from flowers, to the human body, seashells etc.
• Fibonacci ratios are easy to use and just as easy to calculate. You take the range from one pivot to the next and add or subtract the ratios.
• The important fact or phenomena is, the market moves in a Fibonacci Series of ratio price movements. There are rallies, retracements and extensions as well as dips, retracements and extensions.
• Ratios for Price Retracement Levels: 0.236, 0.382, 0.50, 0.618, 0.707 and 0.886.
• Ratios for Price Extension Levels: 1.272, 1.414, 1.618, 2.00, 2.236 and 2.618.
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
The Relationship among the
Retracement & Extension Levels
Reciprocal Square Root
4.237 0.236 0.486
2.618 0.382 0.618
2.000 0.500 0.707
1.618 0.618 0.786
1.414 0.707 0.841
1.272 0.786 0.887
1.000 1 1.000
0.500 2 1.414
0.333 3 1.732
0.250 4 2.000
0.200 5 2.236
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
The Relationship among the
Retracement & Extension Levels
Reciprocal Square Root
4.237 0.236 0.486
2.618 0.382 0.618
2.000 0.500 0.707
1.618 0.618 0.786
1.414 0.707 0.841
1.272 0.786 0.887
1.000 1 1.000
0.500 2 1.414
0.333 3 1.732
0.250 4 2.000
0.200 5 2.236
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
The Relationship among the
Retracement & Extension Levels
1. Retracement
2. Extension
3. Expansion
4. Alternate
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
The Relationship among the
Retracement & Extension Levels
Retracements take the distance from one pivot
to the next. Preferably a #1 to a #2 pivot and
take a portion of that range that is generally
100% or less. Common ratios to calculate
retracements are 0.236, 0.382, 0.500, .0.618,
and .0.786 and 0.886.
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
The Relationship among the
Retracement & Extension Levels
Extensions take the range from point #1 to Point
#2 and multiplying that distance by a Fibonacci
number, add the two numbers together and
project into the future where a possible turning
point could be.
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
The Relationship among the
Retracement & Extension Levels
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
The Relationship among the
Retracement & Extension Levels
Expansions take the distance from the # 3 pivot
to the #2 pivot and then multiply that distance
by Fibonacci numbers and add that range to the
#3 pivot
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
The Relationship among the
Retracement & Extension Levels
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
The Relationship among the
Retracement & Extension Levels
Alternates take the distance between point #1
and point #2 and adding that distance to point
#3 to give you another type of projection into
the future.
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
The Relationship among the
Retracement & Extension Levels
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
Fibonacci Analysis is a Leading
Indicator
�How to calculate probable future turning points.
�Extensions and expansions for taking profits.
�Entry and exit levels, and stop placement levels.
�Where buyers are likely to support the market.
�Where sellers should be taking profits.
�Where the high probability trades are.
�Which Fibonacci levels are more likely to turn the market.
�Fibonacci use from intra-day to longer-term trading and all markets.
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION
Q & A
THANK YOU!
FIBONACCI SEQUENCEPROJECTION AND
RETRACEMENTQ & AINTRODUCTION