Technical Analysis Workshop Series

Session Seven
Fibonacci Trading Part 1
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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 SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
Profile
FM & BC MODEL
DOW THEORY
Active member of TASS
Graduated from NTU in 1976
25 years of experience
Runs Investors 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 SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
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 SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
FIBONACCI TRADING
TECHNICAL
ANALYSIS
FIBONACCI SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
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
ANALYSIS
FIBONACCI SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
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 SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
FIBONACCI SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
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 SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
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 SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
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 SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
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 SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
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 SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
The Relationship among the
Retracement & Extension Levels
1. Retracement
2. Extension
3. Expansion
4. Alternate
FIBONACCI SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
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 SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
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 SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
The Relationship among the
Retracement & Extension Levels
FIBONACCI SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
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 SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
The Relationship among the
Retracement & Extension Levels
FIBONACCI SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
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 SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
The Relationship among the
Retracement & Extension Levels
FIBONACCI SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
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 SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
FIBONACCI SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION
Q & A
THANK YOU!
FIBONACCI SEQUENCE
PROJECTION AND
RETRACEMENT
Q & A
INTRODUCTION