EW FIBONACCI Ratios, FIB Retracement and Extension application !
Updated
In this post, I'm going to focus on Fib Retracement and Fib Extension Ratios by Elliott Wave, and show you how to best use these tools.
Fibonacci ratios are mathematical ratios derived from the Fibonacci sequence.The Fibonacci sequence is the work of Leonardo Fibonacci.
Fibonacci sequence is used in many applications, movies and photography, space studies, stock market actions, and many other fields.
Fibonacci is a proven approach for measure price movement relationships. For Elliott heads, it means Fibonacci numbers are tools to help guide us in our interpretation where we think price movements will go.
The most common Fibonacci ratios used in the stock markets are:
1 - 1,272 - 1,618 - 2,618 -3,618- 4.23 (extension)
0.236 - 0.382 - 0.5 - 0.618 - 0.786 (retracement)
Let's start with Elliott Impulsive Wave rules !
Wave 1: the beginning of each wave and retracet with
Wave 2: may never retrace deeper than the beginning of wave 1
Wave 3: often the longest, but never the shortest
Wave 4: may never retrace below the top of wave 1
Wave 5: x
Fibonacci ratios :
Wave 2
The most common retracements we look for in a Wave 2 pullback are either a 0.5 or 0.618 retracement of Wave 1
We expect only 12% of Wave 2 to hold 0,382 retracements of Wave 1
We anticipate 73% of Wave 2 retracements between 0,5 to 0,618
We anticipate 15% of Wave 2 to retrace below the 62%
Wave 3
Wave 3 is related to Wave 1
Fibonacci relationships:
Wave 3 is either
1,618 length of Wave 1
or 2,618 the length of Wave 1
or 4,236 the length of Wave 1
The most common multiples of Wave 1 to Wave 3 are the 1,618 and 2,618
If Wave 3 is extending, we typically look for 4,236 or higher
Only approximately 2% will a Wave 3 be less than Wave 1
We anticipate 15% of Wave 3 trade between 1 and 1,618 of Wave 1
We can anticipate 45% of the time Wave 3 will push to between 1,618 and 1,75
We can anticipate 8% of Wave 3 will extend beyond 2,618 or higher
Wave 4
Wave 4 is related to Wave 3
0,236 of Wave 3 or
0,382 of Wave 3 or
0,50 of Wave 3 or
0,618 of Wave 3
We can anticipate only 15% of the time Wave 4 to retrace between 0,236 to 0,382
We can anticipate 60% of the time Wave 4 to retrace between 0,382 and 0,5
We can anticipate 15% of the time Wave 4 to retrace between 0,5 and 0,618
We can anticipate 10% of the time Wave 4 retrace 0,618 or greater
Wave 5
Wave 5 has two relationships. Wave 5 has a direct correlation to the Fibonacci relationship of Wave 3
1. If Wave 3 is greater than 1.62, or extended
Wave 5 is a 1 to 1
or 1.618 of Wave 1
or 2,618 of Wave 1
I don't know any statistics, but in my experience a 1.618 or 1 to 1 is the most likely
2. If Wave 3 is less than 1,618. Wave 5 will often overextend.The ratio of Wave 5 will be based on the length from the beginning of Wave 1 to the top of Wave 3
Extended Wave 5 is either 0,618 from the beginning of Wave 1 to top of Wave 3
or 1,618
Unfortunately, my english is not so good and I work with google translate, but if you have any questions I will be happy to answer them .
➡️If you like my posts smash the like👍👍 button, comment or follow me. It helps me to publish more free education, also on request ⬅️
Fib retracement and Extension application follow 📚
Fibonacci ratios are mathematical ratios derived from the Fibonacci sequence.The Fibonacci sequence is the work of Leonardo Fibonacci.
Fibonacci sequence is used in many applications, movies and photography, space studies, stock market actions, and many other fields.
Fibonacci is a proven approach for measure price movement relationships. For Elliott heads, it means Fibonacci numbers are tools to help guide us in our interpretation where we think price movements will go.
The most common Fibonacci ratios used in the stock markets are:
1 - 1,272 - 1,618 - 2,618 -3,618- 4.23 (extension)
0.236 - 0.382 - 0.5 - 0.618 - 0.786 (retracement)
Let's start with Elliott Impulsive Wave rules !
Wave 1: the beginning of each wave and retracet with
Wave 2: may never retrace deeper than the beginning of wave 1
Wave 3: often the longest, but never the shortest
Wave 4: may never retrace below the top of wave 1
Wave 5: x
Fibonacci ratios :
Wave 2
The most common retracements we look for in a Wave 2 pullback are either a 0.5 or 0.618 retracement of Wave 1
We expect only 12% of Wave 2 to hold 0,382 retracements of Wave 1
We anticipate 73% of Wave 2 retracements between 0,5 to 0,618
We anticipate 15% of Wave 2 to retrace below the 62%
Wave 3
Wave 3 is related to Wave 1
Fibonacci relationships:
Wave 3 is either
1,618 length of Wave 1
or 2,618 the length of Wave 1
or 4,236 the length of Wave 1
The most common multiples of Wave 1 to Wave 3 are the 1,618 and 2,618
If Wave 3 is extending, we typically look for 4,236 or higher
Only approximately 2% will a Wave 3 be less than Wave 1
We anticipate 15% of Wave 3 trade between 1 and 1,618 of Wave 1
We can anticipate 45% of the time Wave 3 will push to between 1,618 and 1,75
We can anticipate 8% of Wave 3 will extend beyond 2,618 or higher
Wave 4
Wave 4 is related to Wave 3
0,236 of Wave 3 or
0,382 of Wave 3 or
0,50 of Wave 3 or
0,618 of Wave 3
We can anticipate only 15% of the time Wave 4 to retrace between 0,236 to 0,382
We can anticipate 60% of the time Wave 4 to retrace between 0,382 and 0,5
We can anticipate 15% of the time Wave 4 to retrace between 0,5 and 0,618
We can anticipate 10% of the time Wave 4 retrace 0,618 or greater
Wave 5
Wave 5 has two relationships. Wave 5 has a direct correlation to the Fibonacci relationship of Wave 3
1. If Wave 3 is greater than 1.62, or extended
Wave 5 is a 1 to 1
or 1.618 of Wave 1
or 2,618 of Wave 1
I don't know any statistics, but in my experience a 1.618 or 1 to 1 is the most likely
2. If Wave 3 is less than 1,618. Wave 5 will often overextend.The ratio of Wave 5 will be based on the length from the beginning of Wave 1 to the top of Wave 3
Extended Wave 5 is either 0,618 from the beginning of Wave 1 to top of Wave 3
or 1,618
Unfortunately, my english is not so good and I work with google translate, but if you have any questions I will be happy to answer them .
➡️If you like my posts smash the like👍👍 button, comment or follow me. It helps me to publish more free education, also on request ⬅️
Fib retracement and Extension application follow 📚
Note
Use Fib retracement for Wave 2 and Wave 4 Note
Use Fib Retracement for targeting Wave 5Note
Note
Bonus1 : Fib Time toolsPredicting time units is the most difficult in my opinion, this requires a lot of practice when recognizing the structure .. use for setting 1 - 1.618 - 2- 2.618 -3 - 3.618- 5 - 8
Note
Fib extension,not konversion :)I hope you enjoyed this post, if so, don't forget to like 👍 👍 it
Nice day and trade save 💲
Note
Bonus 2Note
Bonus3: EW psychologyIn my opinion, very important to understand why waves, but also patterns, channels ... work the way they work !!
Wave 1: The crowd sentiments are decidedly bearish if it is happened just after a long recession trend. It progresses very silently and consistently and try to make base as majority of investor are not so confident to generate new position After
long down movement, it might be complete in weeks or months.
Wave 2:
The wave 2 beginning after wave 1 when investors are in
mood of profit booking. This wave is corrective in nature and against the main long-term trend. It is not extended beyond the wave 1. In normal case, it corrects up to the 0,618 or 0,786 of wave 1. In some of the case, it extends up to 1 point over wave 1. Because of good macroeconomic factors and other positive sentiments, there is a strong bull market. In this case, this wave is not correct more than 0,5 of the wave 1 but it gives time wise correction means price is not going down, but it is a consolidation mode which consumes the time before moving in line with main trend line.
Wave 3: This wave is very important because it covers more price length in main trend than any other impulsive wave.This wave 3 is usually sharper and faster of any waves with formation of gaps in. In mid-point of wave 3, the people also make position to take benefit of it . Wave 3 is usually bigger wave in length than any other wave. It normally exceeds at least 1.618 Fibextension of wave 1 and go beyond
up to 2.618 Fib extension of wave 1 and even go more. The main rule to correctly identify this wave is that wave is not being the shortest one.
Wave 4: Wave 4 is clearly corrective. The wave is normally retrace by 0,38 or 0,236 of . This wave is often frustrating because progress is lacking in main trend.
Wave 5: The new amatured investors who are now convinced that we are in bull run, they drive this wave further in main trend direction. it is final leg in dominant trend. The news of
all in all is very optimist and many momentum indicators showing divergences.
Note
Bonus 4 ( by request ) long topping tails strategyIt always depends on your trading system but always look at the volume.
Rule 1, do not close your position until you reach an LL.
Rule 2, close your position, or win with whoever closes the next card under the topping tail. Personally,
I act at short notice and often close my positions while the pattern is being created if other indicators indicate this .
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