If you do your homework, which is the only way to learn, you will see that fib lines match up to support resistance lines, and then you will start to get a better understanding of how markets move, and how levels are tested and retested
Are there any good books that go into the type of analysis that Commisso did in his post. Most of the books I have come across explain Technical Analysis but don't go too much into how to "put it all together" in real world situations. Thanks.
At the DTUSA meeting this past Saturday we heard a speaker (Bernie Mitchell) who said that he uses tick charts set to 233 and 610 ticks because these numbers are fib numbers. I assume he means that these numbers appear in the fibonacci number series, but I'm not sure how to mathematically derive that number series. Can someone knowledgable please respond? After deriving the number series, you have to somehow transform this series into the familiar percentages we all use ( 38%, 50% and 68% are the most common, of course). A second question, therefore, would be how these percentages are derived from the fibonacci number series. Thanks.
fib numbers are just numbers that seem to recur more often than pure random numbers when dealing with "natural" things. One thing I have noticed is that if a .618 retracement is broken, more than half the time there will be continuation of the move, often to 100% or more.
fib retracement and extensions are real important the 233 and 610 i am not too sure about, but sometimes traders find that a number near a fib number is the right level for him by experience - so 610 may just happen to relate to 618 - or it may of course relate to something i have personally not used
I agree. IMO, fib numbers and geometry is not only found in the markets, it is universally accepted throughout nature. It is evident from the smallest snail, through the body of man and plant, all the way throughout the Milky Way. It is ever onward and ever outward process. If you want to play the fib numbers, I have found the .382 and the .618 are the most important. The .786 is also an important number. However, I would never buy or sell at just one of these numbers. You have to combine them. I only played the game when I could combine a .382 and a .618 within one point on the S&P e-minis. What is also important is the time frames you look at. The higher the time frame, the stronger the the support and resistance. A .618 retracement on a 30 minute chart obviously takes precedence over a .382 on a 5 minute chart. Not only show you look for .382 and .618 commonalities on the same time frame, you can combine time frames as well. For instance, you may have a .618 sell retracement on a 30 minute chart combined with a .382 sell retracement on a 5 minute chart. You almost always will get some sort of a bounce with the retracement commonalities. If you can combine it with something else like divergence, etc., you could be on the right track. By the way, although it does work, I no longer trade this way, and seldom look at retracements.
Sarasota love your post 5 and a bit paragraphs about how fibs will change your life and the last part - "i dont use them anymore" classic!!!