Technical Indicators: F (part 1)
Fibonacci Arcs
Fibonacci Arcs are created by first drawing a trendline between two extreme points, i.e. trough and peak. Three arcs are generated at "Fibonacci Intervals" usually defined as 38.2%, 50% and 61.8% of the distance between a price maximum and minimum. They are centered on the second extreme point and intersect the trendline.
The interpretation of Fibonacci Arcs involves anticipating support and resistance as prices approach the arcs.
What are now known as "Fibonacci numbers" are said to be based upon observations of the Great Pyramid of Gizeh in Egypt by Italian mathematician Leonardo Fibonacci born around 1170 AD. Read more in Elliott Wave and Fibonacci retracements.
Fibonacci Fans
Fibonacci Fan lines take their name from their obvious fanlike appearance. They are generated by first drawing a trendline between two extreme points, i.e. trough and peak. Next, an "invisible" vertical line is drawn through the second extreme point. Three lines are then drawn from the first extreme point passing through the invisible vertical line with their slopes at the Fibonacci levels, usually 38.2%, 50.0% and 61.8%.
As the daily prices pass these three fans, one can make predictions about future price movements based upon the appearance of price resistance or support at these intersection points. When the prices hold at the fan line, there is support there. If they quickly move through the fan line, do not look for support until the next fan line is met.
| |
Fibonacci Retracements
Fibonacci Retracements are displayed by first drawing a trendline between two extreme points, i.e. a trough and opposing peak. A series of horizontal lines are drawn intersecting the trendline at the Fibonacci levels.
After a significant price move in either up or down direction, prices will often give back a significant portion (if not all) of the original move. As prices retrace, look for support and resistance levels often occurring at or near the Fibonacci Retracement levels.
Fibonacci Time Series
Fibonacci Time Series is a series of vertical lines spaced at the Fibonacci intervals.
Use the Fibonacci Time Series to look for significant changes in price near the vertical lines.
|
