Fibonacci Retracement Trading

Quote from TraderZones:

fib levels are not more significant than any other level. Studies such as the following (attached):

"Our conclusion must be that there is no significant difference between the frequencies with which price and time ratios occur in cycles in the Dow Jones Industrial Average, and frequencies which we would expect to occur at random in such a time series. In our introduction, we noted that empirical evidence from academic studies suggests that not all of technical analysis can be dismissed prima facie. The evidence from this paper suggests that the idea that round fractions and Fibonacci ratios occur in the Dow can be dismissed."
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Same post to this guy, different forum:

I see what you're saying. I don't think there's any special magic in the fib numbers themselves, but it's more of a visual gauge for people. For example, a 50% retracement is a 1/2, and 61.8 is about 2/3. I don't take trades just because I'm at a fib level either... I wait for my momentum indicator and price action to line up.

Fib extensions are kind of the same... 100% extension equals the same move as the previous run, minus the retracement. From my experience, the extension levels are very accurate, especially 61, 100, and 138. There's no way you can tell me the market doesn't react to those levels... just happens to much.
 
Quote from TraderZones:

fib levels are not more significant than any other level. Studies such as the following (attached):

"Our conclusion must be that there is no significant difference between the frequencies with which price and time ratios occur in cycles in the Dow Jones Industrial Average, and frequencies which we would expect to occur at random in such a time series. In our introduction, we noted that empirical evidence from academic studies suggests that not all of technical analysis can be dismissed prima facie. The evidence from this paper suggests that the idea that round fractions and Fibonacci ratios occur in the Dow can be dismissed."
More...

Robert Prechter replied to the Batchelor-Ramyar study, saying that it "does not challenge the validity of any aspect of the Wave Principle...it supports wave theorists' observations," and that because the authors had examined ratios between prices achieved in filtered trends rather than Elliott waves, "their method does not address actual claims by wave theorists."[6] The Socionomics Institute also reviewed data in the Batchelor-Ramyar study, and said this data shows "Fibonacci ratios do occur more often in the stock market than would be expected in a random environment."
 
Here is anopther example of the Fibonacci at work for me.
(Using the Opening S/R as a starting base for the Fibs)
Also with it gapping down at the open, I was looking LONG for it to try to fill the gap.

2u40mzq.jpg
 
Quote from hawk24:

Robert Prechter replied to the Batchelor-Ramyar study, saying that it "does not challenge the validity of any aspect of the Wave Principle...it supports wave theorists' observations," and that because the authors had examined ratios between prices achieved in filtered trends rather than Elliott waves, "their method does not address actual claims by wave theorists."[6] The Socionomics Institute also reviewed data in the Batchelor-Ramyar study, and said this data shows "Fibonacci ratios do occur more often in the stock market than would be expected in a random environment."
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A "reply" to a study saying BLAH BLAH BLAH has about as much use as a cup of snow in a blizzard.

Elliot Wave has also failed when thoroughly studied, so I really don't care WHAT Prechter thinks.
 
Quote from TraderZones:

A "reply" to a study saying BLAH BLAH BLAH has about as much use as a cup of snow in a blizzard.

Elliot Wave has also failed when thoroughly studied, so I really don't care WHAT Prechter thinks.
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what doesnt...
 
Perfect setup Today....
I used the gap lower at the open the figure out the direction to make my entry. Bought a 27Put on the bounce back up after the first inital dip and testing the Fib levels.
Exited when it hit the Fib extentions target.
$660 profit today.
2w20gft.jpg
 
Missed a couple different entries today.
One in the morning, one during the lunch hour.
But, I hit the call entry on the after lunch pullback.
Place the order as soon as it hit the Fib extention.
Got out about 5 minutes time with a $330 profit.

DONE for the day…and probably until after the Holiday.
Next week is a short trading week, and volumn will be low.
I've seen accounts get killed on holiday weeks if they are traded..

"Sorry. typo on chart. I actually traded the 25 Call, not the 24."

ngvau0.jpg
 
Hey guys... My trading style is built around Fib extensions and retracements. I use a MACD indicator to gauge momentum, tick charts for price action, and fibs for targets. It's proved to be a very consistent system. I have a few trading videos up on my blog... feel free to check it out.

http://chrisdunn.typepad.com

Happy trading,

Chris
 
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