Learn To Trade Class #3

Plan Your Trade, Trade Your Plan

Fibonacci Ratio Analysis with Elliott Wa

1.618
Today we will learn how to combine Fibonacci
Ratio Analysis with EW for trading entries and exits.
We will begin at 7:30 PM ET You will hear no sound until we start

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 Pisano Bigollo (Leonardo Fibonacci)

circa 1170 to 1250 discovered the Fibonacci sequence
by breeding rabbits.

ibonacci #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

1.618
Golden Ratio

FIBONACCI
FIBONACCI

1.000

0.618

FIBONACCI
FIBONACCI

0.382

0.618

Fibonacci
0.382

0.618

ibonacci #s & Ratios

ibonacci #s & Ratios

The 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 its
next higher #.
Example : 0/1 = 0
(Starting Point)

Example : 1/1 = 1
(Ending Point)

Example : 1/2 = 0.50

retracement level)

(Major

ibonacci #s & Ratios

The 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 its
Once we cross the fourth set of fib #s the ratios
next higher #.
start to narrow down to the inverse of the Golden
Ratio
0.618
Example
: 2/3 = .6666
13/21 = .6190
89/144 = .6180
3/5 = .
6000
5/8 = .6250
8/13 = .6153

21/34 = 144/233
.
= .6180
6176
233/377 = .6180
34/55 = .6181
377/610 = .6180
55/89 = .6179

ibonacci #s & Ratios

The Fibonacci Sequence
0, 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
Example
: 1/0
=0
5/3
= 1.666 34/21 = 1.619
the
Golden
Ratio
1.618
1/1 = 1 8/5
= 1.600 55/34 = 1.617
2/1 = 2.000 13/8 = 1.625 89/55 = 1.618
3/2 = 1.500 21/13 = 1.615 144/89 = 1.618

ibonacci #s & Ratios

2.00
1.618

0.00

0.382
0.50
0.618

100.0

External Retracement
Expansions

-For exits on trend trades

-For entries on counter trend trade

Retracements
-For entries

ibonacci Retracements

Retracements ratios are

used to analyze
corrective Waves
38.2%

. by measuring
previous motive waves
61.8%
100%

100%

ibonacci 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%

ibonacci Retracements
5

0.00
Retracements
for Entry

1. Identify a completed
B 5-wave impulse & anticipate
0.382
a 3-wave correction

3
4

0.50
2. Measure

A
C

impulse wave
to define retracement levels
0.618
3. Watch for the end of
0.786
correction for entry
100.0

Motive Waves
Already Completed

Wave
Wave
Wave
Wave

1
3
A
W

Corrective Waves To
Study With
Retracements

Wave
Wave
Wave
Wave

2
4
B
X

Retracement
s

Retracement
s

Motive Wave
Tip
Quickly access
the Trading
Analysis Fib
ratios within
the wave count

Retracement
s

Motive Wave
Tip
Access the
default Fib
ratios from the
components
panel

External Retracements
127.2%
261%

Ext. Ret. ratios are

used to analyze motive
waves
. by measuring
previous corrective
waves.

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 contratrend trades

Key Ratios
127.2 %
161.8 %
200.0 %
261.8 %
423.6%

External Retracements
2.00
1.618
3?

B
2

A
C

Extensions for Exit

1. Identify a completed
1.272
correction & anticipate a
1.00
new impulse wave
0.6182.

Measure corrective wave

0.000to define extension levels
3. Watch for the end of
correction for entry

Corrective Waves
Already Completed

Wave
Wave
Wave
Wave

2
4
B
X

Motive Waves To
Study With
Extensions

Wave
Wave
Wave
Wave

3
5
C
Y

Ext.
Retracement
s

External
Retracements

Motive Wave
Tip
Quickly access
the Trading
Analysis Fib
ratios within
the wave count

External
Retracements

Motive Wave
Tip
Access the
default Fib
ratios from the
components
panel

Fibonacci Expansions
200%

Expansions are
used to measure motive
waves
. by measuring
previous motive &
corrective waves.

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 Ratios
38.2 %
61.8 %
100.0 %
161.8 %
200.0 %
261.8 %
423.6%

Fibonacci Expansions
1.618

Expansions for Exit

1. Identify
1.000
5Click 2
3

2
Click 1

B
A

Click 3
C

a completed
Motive & Correction &
anticipate a new 5-wave
0.618
motive.
2. Measure (click) the 3
0.000
end points of the Motive
& Corrective Wave.
3. Watch for the end of
the Motive wave at
Expansions ratios for exit.

Corrective Waves
Already Completed

Wave 1,2
Wave 3,4
Wave 1-3
Wave A,B
Wave W,X
Any 2 adjacent
waves in a
triangle

Motive Waves To
Study With
Extensions

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

Expansions

Expansions

Motive Wave
Tip
Quickly access
the Trading
Analysis Fib
ratios within
the wave count

Expansions

Motive Wave
Tip
Access the
default Fib
ratios from the
components
panel

 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

Building A Fib
Zone