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Elliot Waves Complete Guide | Chapter 4.4 - "Fibonacci Ratios"
Updated
Hello Traders. Welcome to Chapter 4.4, where we will be learning about the "Fibonacci Ratios" in Elliott Waves, a very important aspect of understanding the major points of entries, exits, and predictions of wave counts; furthermore, the Fibonacci Ratio is an extremely useful tool to measure the target of a wave's move within an Elliott Wave structure. Different waves in an Elliott Wave structure relate to one another with other Fibonacci Ratio points.
đź“šChapter 4 Glossary:
4.1 Alternation
4.2 Channeling
4.3 Psychology
đź“– 4.4 Fib-Ratio
4.5 Motive Wave Multiples
4.6 Corrective Wave Multiples
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The actual practical application of Fibonacci (abbreviated fib) levels and Elliott Waves can be divided into two separate categories:
• Retracement (indicated in the yellow) = identifies probable targets for a corrective wave
• Extensions (indicated in the purple) = identifies probable targets for the next impulsive wave
The Retracement measures how far the correction retraces the previous wave via the Fibonacci Retracement tool located on the left side of your list on the TradingView platform.
Fib guidelines for retracement on all of the waves:
• Wave 2 = 50%, 61.8%, 76.4%, 85.4% of wave 1
• Wave 3 = 161.8%, 261.8% only of wave 2
• Wave 4 = 38.2% to 61.8% of wave 3
• Wave 5 = 61.8%, 100%, or 123.6% of wave 4
Invalidation points:
• Wave 2 retracement cannot exceed 100% of wave 1.
• Wave 3 cannot be the shortest wave.
• Wave 4 will NEVER go into wave 1 price territory.
âť— If you refer to chapter 4.1 on the "Alternation" theory, the guideline for waves 2 and 4 is more reliable for retracements than fib levels alone; however, wave 2 generally corrects deeply (61.8%), while wave 4 is shallow, it only reaches the 38.2%. If the daily price action candlestick signals occur, most of the time a retest and entry at the 50% level is possible.
đź“šChapter 4 Glossary:
4.1 Alternation
4.2 Channeling
4.3 Psychology
đź“– 4.4 Fib-Ratio
4.5 Motive Wave Multiples
4.6 Corrective Wave Multiples
-----
The actual practical application of Fibonacci (abbreviated fib) levels and Elliott Waves can be divided into two separate categories:
• Retracement (indicated in the yellow) = identifies probable targets for a corrective wave
• Extensions (indicated in the purple) = identifies probable targets for the next impulsive wave
The Retracement measures how far the correction retraces the previous wave via the Fibonacci Retracement tool located on the left side of your list on the TradingView platform.
Fib guidelines for retracement on all of the waves:
• Wave 2 = 50%, 61.8%, 76.4%, 85.4% of wave 1
• Wave 3 = 161.8%, 261.8% only of wave 2
• Wave 4 = 38.2% to 61.8% of wave 3
• Wave 5 = 61.8%, 100%, or 123.6% of wave 4
Invalidation points:
• Wave 2 retracement cannot exceed 100% of wave 1.
• Wave 3 cannot be the shortest wave.
• Wave 4 will NEVER go into wave 1 price territory.
âť— If you refer to chapter 4.1 on the "Alternation" theory, the guideline for waves 2 and 4 is more reliable for retracements than fib levels alone; however, wave 2 generally corrects deeply (61.8%), while wave 4 is shallow, it only reaches the 38.2%. If the daily price action candlestick signals occur, most of the time a retest and entry at the 50% level is possible.
Note
Elliot Waves Complete Guide | Chapter 1 - "The Overall Cycle"
Note
Elliot Waves Complete Guide | Chapter 2.1 - "Motive Waves"
Note
Elliot Waves Complete Guide | Chapter 2.2 - "Ending Diagonal"
Note
Elliot Waves Complete Guide | Chapter 2.3 - "Extensions"
Note
Elliot Waves Complete Guide | Chapter 3.1 - "Corrective Waves"
Note
Elliot Waves Complete Guide | Chapter 3.2 - "Flat-Expanded Flat"
Note
Elliot Waves Complete Guide | Chapter 3.3 - "Running, Contract"
Note
Elliot Waves Complete Guide | Chapter 3.4 - "Barrier/Expanded"
Note
Elliot Waves Complete Guide | Chapter 3.5 - "Double Three"
Note
Elliot Waves Complete Guide | Chapter 3.6 - "Triple Three"
Note
Elliot Waves Complete Guide | Chapter 4.1 - "Alternation"
Note
Elliot Waves Complete Guide | Chapter 4.2 - "Channeling"
Note
Elliot Waves Complete Guide | Chapter 4.3 - "Market Psychology"
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