FIBONACCI RATIO
1,1,2,3,5,8,13,21,34,55,89,144 . . .
Dividing any number of the Fibonacci sequence by the
next higher number in the series causes the series to converge asymptotically
to the ratio:
1.618(1:1.618=0.618)
Elliott recognized the importance for this summation series and he wrote, "From
experience I have learned that 144 is the highest number of practical value. In
a complete cycle of the stock market, the number of minor waves is 144." The
breakdown of this complete cycle is shown in the Table 2—1.
The entire
Fibonacci summation series is employed here. Elliott stated, "The length of
waves may vary, but not the number of waves. The numbers of this series are
useful in timing the waves, both advancing and declining".
The general
application of this principle is that a move in a particular direction should
continue until such time that it completes a number consistent with the
Fibonacci summation series. This phenomenon is best illustrated in Figure 2-7.
A move that
extends itself beyond 3 days should not reverse until 5 days are reached. A move
that exceeds 5 days should last 8 days. A trend of 9 days should not finish
before 13 days, and so on. This basic structure of calculating trend changes
applies equally for hourly, daily, weekly and monthly data. But this is only an
"ideal model," and one must never expect commodity prices to behave in such a
precise and predictable manner. Elliott noted in his Nature's Law that
deviations can occur in both time and amplitude, and individual
waves are not likely to always develop in this regular pattern.
Table 2-1
Bull Bear Number of Market Market Total
Major
waves 5 38 complete
waves
Intermediate
waves 21 13 34 complete waves
Minor
waves 89 55 144 complete waves
Forex Art Of Fibonacci (Forex 101)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15. 16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30. 31.
32. 33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44. 45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63. 64.
65.
66.
67.
68.
69.
70.
71.
72. 73.
74.
75.
76.
77.
78.
79,
80.
81.
82.
83.
84.
85.
86.
87.
88.
89. 90.
91.
92.
93.
94.
95.
96.
97.
98.
99.
Forex Art Of Fibonacci (Forex 102)
100.
101.
102.
103.
104.
105.
106.
107.
108.
109.
110.
111.
112.
113.
114. 115.
116.
117.
118. 119.
120.
121. 122.
123.
124.
125. 126.
127. 128.
129. 130.
131.
132.
133.
134. 135.
136.
137.
138.
139.
140.
141.
142. 143.
144.
145. 146.
147.
148.
149.
150.
151.
152.
153. 154.
155. 156.
157.
158.
159.
160.
161.
162.
163.
164.
165. 166.
167.
168.
169.
170.
