Post on 07-Apr-2015
transcript
The Traders & Investors Club
Welcome to
Tuesday, 17th March 2009
ODL Securities
www.tradersandinvestorsclub.co.uk
Fibonacciand the
Elliott Wave
Euclid & The Golden Ratio
Who Was Euclid?
Who Was Euclid?
Lived in Alexandria circa 300 B.C.
Studied in Athens under Plato
Elements - a 13-volume mathematical textbook
Discovered the Golden Ratio
Euclid And The Golden Ratio
(Phi)
Euclid And The Golden Ratio
1.618
0.618
Euclid And The Golden Ratio
Euclid And The Golden Ratio
Euclid And The Golden Ratio
Euclid And The Golden Ratio
Euclid And The Golden Ratio
Euclid And The Golden Ratio
Euclid And The Golden Ratio
Fibonacci & The Golden Ratio
Who was Fibonacci?
Who was Fibonacci?
Born Leonardo da Pisa in 1175AD
Published the Liber Abaci in the 1200s
Introduced the decimal system to the West
Discovered the ‘Fibonacci Sequence’
So What?
Why is Fibonacci relevant today?
How would you trade this?
Begins with 0 and 1….
We then add the previous two numbers in order toget the next number in the sequence……..
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc.
Fibonacci And The Golden Ratio
Mathematical Properties of the Sequence
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc.
Divide any number by the one before it, e.g 55/34
The answer is always close to 1.618
Divide any number by the one after it, e.g 12/34
The answer is always close to 0.618
Fibonacci And The Golden Ratio
Further Properties of the Sequence
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc.
The ratios of alternate numbers, e.g. 21/55
Approach a constant of 0.382
Fibonacci And The Golden Ratio
Further Properties of the Sequence
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc.
The inverse ratios of alternate numbers, e.g. 55/21
Approach a constant of 2.618
Fibonacci And The Golden Ratio
Fibonacci And The Golden Ratio
0
0.3820.50.618
100161.8200261.8
1 / 0.618 = 1.618
1 / 1.618 = 0.618
0.618 x 0.618 = 0.382
SqRoot of 1.618 = 0.618
Inverse of 0.618 = 0.382
1.618 x 1.618 = 2.618
Fibonacci Ratios
Phi = 1.618
Reciprocal of Phi = 0.618
SqRoot of 1.618 = 1.272
SqRoot of 0.618 = 0.786
Reciprocal of 1.272 = 0.786
SqRoot of 5 = 2.236
Harmonic Fibonacci Ratios
Fibonacci Levels With Harmonics
Extensions %: 261.8223.6200161.81.272
Retracements %: 10078.661.85038.20
Fibonacci Retracements
Fibonacci Extensions
A Brief Introduction To Elliott Wave
Who Was Elliott?
Ralph Nelson Elliott
Born 1871 in Marysville, Kansas
In 1929, he became an invalid devoting himself to study ofthe stock market
Called the 1935 market bottom
Published Nature's Law - The Secret Of The Universe at theage of 75
Identified by Ralph Nelson Elliott during the 1930s
Elliott Wave Theory is a direct descendant of Dow Theory
Crowd behaviour trends and reverses in recognisable patterns
Elliott isolated thirteen ‘waves’ or patterns of directionalmovement
These waves are created by ‘crowd psychology’ which isforever shifting between optimism and pessimism
Elliott Wave is fractal in nature
The Elliott Wave
The complete eight-wave cycle comprises afive-wave impulse followed by a three-wave
correction
In a bull market, the five-wave impulse is upand the three-wave correction is down
In a bear market, the five-wave impulse is downand the three-wave correction is up
The Elliott Wave
Impulse
Wave
1
2
3
4
5
a
b
The Elliott Wave
c
1
2
3
4
5
a
b
Some Elliott Wave Rules
Wave 2 never retraces 100% of Wave 1
c
1
2
3
4
5
a
b
Some Elliott Wave Rules
Wave 4 never overlaps Wave 1
c
1
2
3
4
5
a
b
Some Elliott Wave Rules
Wave 3 is usually the longest but never the shortest
c
1
2
3
4
5
a
b
Some Elliott Wave Rules
Waves 1 & 5 tend towards equality
c
1
2
3
4
5
a
b
Some Elliott Wave Rules
Waves 2 & 4 tend towards equality
c
1
2
3
4
5
a
b
Some Elliott Wave Rules
Triangles nearly always form in Wave 4
c
1
2
3
4
5
a
b
Some Elliott Wave Rules
Wave 3 is usually the steepest and strongest
c
1
2
3
4
5
a
b
Some Elliott Wave Rules
Wave 5 always has less momentum than Wave 3
c
Elliott WaveChannel Technique
Elliott Wave Channel Technique
Brent Crude Weekly Chart
Corrective
Wave
1
2
3
4
5
a
b
c
Some Elliott Wave Rules
Waves a & c tend towards equality
1
2
3
4
5
a
b
Some Elliott Wave Rules
Triangles nearly always form in Wave b
c
1
2
3
4
5
a
b
c
Some Elliott Wave Rules
Wave c must exceed Wave a swing low
1
2
3
4
5
a
b
c
Some Elliott Wave Rules
a-b-c correction confirmed when Wave b peak exceeded
Brent Crude Weekly Chart
5
a
b
c
a-b-c correction confirmed when Wave b peak exceeded
The Fractal Nature Of
Elliott Wave
1
2
3
4
5
a
b
The Fractal Nature Of Elliott Wave
c1
2
3
4
5
1
2
3
4
5
a
b
The Fractal Nature Of Elliott Wave
c
1
2
3
4
5
1
2
3
4
5
a
b
The Fractal Nature Of Elliott Wave
c
b
ac
1
2
3
4
5
a
b
c
Some Elliott Wave Rules
a-b-c correction confirmed when Wave b peak exceeded
1
2
3
4
5
a
b
c
Some Elliott Wave Rules
1
2
Fibonacci &Elliott Wave
Fibonacci & The Elliott Wave
Fibonacci & The Elliott Wave
38.2%50%61.8%78.6%
38.2%50%61.8%78.6%
Fibonacci & The Elliott Wave
Retracements
Extensions
Fibonacci & Elliott
In Action
FSTE100 Weekly Bars
FSTE100 Weekly Bars
FSTE100 Weekly Bars
FSTE100 Weekly Bars
FSTE100 Weekly Bars
Fibonacci & The Elliott Wave
FSTE100 Weekly Bars
The ElliottOscillator
The Elliott Oscillator
Similar formula to the MACD
A 5-period EMA* minus a 35-period EMA*
*Exponential Moving Average
1
2
3
4
5
a
b
Some Elliott Wave Rules
Wave 5 always has less momentum than Wave 3
c
FSTE100 Weekly Bars
Wave 2 Wave 4
Fibonacci Finding The Bottom
FSTE100 May 2001 Weekly Bars
FSTE100 May 2001 Weekly Bars
Fibonacci Day Trading The DAX
Day Trading The DAX With Fibonacci
Day Trading The DAX With Fibonacci
Day Trading The DAX With Fibonacci
Day Trading The DAX With Fibonacci
Day Trading The DAX With Fibonacci
Day Trading The DAX With Fibonacci
Day Trading The DAX With Fibonacci
Day Trading The DAX With Fibonacci
Day Trading The DAX With Fibonacci
Day Trading The DAX With Fibonacci
Day Trading The DAX With Fibonacci
Day Trading The DAX With Fibonacci
Day Trading The DAX With Fibonacci
The Elliott Wave
Man’s progress does not occur randomly butrather in a ‘three steps forward, two stepsback’ fashion
Periods of setback are necessary for humanprogress
The Financial Market is a perfect reflection ofmass psychology
The Traders & Investors Club
Welcome to
Tuesday, 17th March 2009
ODL Securities
www.tradersandinvestorsclub.co.uk