Fibonacci Relationships Price and time aspects of wave patterns often reflect Fibonacci ratios. In wave formations, the key Fibonacci ratio is .618, which is known as the Golden Ratio
or Golden Mean. It is represented by the Greek letter phi (ϕ), pronounced “fie.” Its inverse is 1.618. Phi is the only number which, when added to one, is also equal to its inverse. If we square phi or subtract phi from 1, the result is .382, which is another Fibonacci ratio. Each ratio can be expressed as phi—either .618 or its inverse 1.618—raised to a power. Other important
Retracements and entry forex signals levels In impulse waves, second waves usually make deep retracements near .618 times the length of wave one. Fourth waves usually make shallow retracements that are often close to .382 times the length of wave three In a zigzag, the retracement of wave A by wave B will depend on the structure of wave B. For example, in Figure A.21, if wave B is a zigzag, it should retrace 0.5 to .786 of wave A. If wave B is a triangle, it should retrace .382 to 0.50 of wave A.
Multiples and best accurate forex signals In an impulse wave, wave 5 will often equal .618 or .382 times the net distance traveled of waves 1 through 3 When wave 3 is extended, expect wave 5 to be related to wave 1 by equality or .618. When wave 5 is extended, expect wave 5, in price terms, to travel 1.618 times the net distance traveled of waves 1
Clusters and determined forex trading signals targets Whenever possible, we prefer not to rely on just one Fibonacci relationship in forecasting market movements. The most powerful application of Fibonacci analysis is the identification of Fibonacci clusters. A Fibonacci price cluster occurs when two or more Fibonacci price relationships project to approximately the same price level. (A Fibonacci time cluster occurs when two or more Fibonacci time relationships project to approximately the same time.) Since wave patterns unfold at all time frames simultaneously, there is often an opportunity to spot a Fibonacci cluster. The diagram in Figure A.31 illustrates a Fibonacci price cluster.