Fibonacci works due to self fufilling prophecy or becuz 618 is embeded in humans?

[Sprout]

Vanzandt, interesting question. I looked at the chart and saw that the Fibonacci certainly did apply, though not necessarily in the last three days. I drew extensions from high/low points over the past couple of weeks and found that they were quite relevant Here's the chart:

Cool, we have a chart. Looking at the the timescale one could number them from the first bar we see. Bar 1. Bar 2 is also 6/5. Using this convention, the points accentuated in price action occur at Bar 5,7(6/12),15,20,23,24,25.

July 3rd translates to Bar22.

How did one know at Bar23 (the bar before the gap down) that the gap down was coming?
What other scenarios would the Fibonacci have anticipated at Bar23?

Given the current points defined and accentuated with the current level of annotation what is anticipated from today's bar forward?

@MACD
How would you expand this view into three timeframes?

 

[themickey]

Will Fibs work on all stocks, eg penny dreadfuls?
The reason I ask is, I trade price analysis predominantly and by and large with speccy penny dreadfuls it doesn't work for me on these types. Not that I wish to trade speccys, but have noticed there is a very high random element to them.
Thx

 

[peter2h]

How do you mean this? Is there more than one way to calculate Fibonacci ratios? I thought that these ratios are fixed values?

I'm sorry, I think I didn't understand your question. There are in fact many ways to calculate the fibs (retracements, extensions). The values are fixed within contexts due to their fractal nature.

 

[peter2h]

Cool, we have a chart. Looking at the the timescale one could number them from the first bar we see. Bar 1. Bar 2 is also 6/5. Using this convention, the points accentuated in price action occur at Bar 5,7(6/12),15,20,23,24,25.

July 3rd translates to Bar22.

How did one know at Bar23 (the bar before the gap down) that the gap down was coming?
What other scenarios would the Fibonacci have anticipated at Bar23?

Given the current points defined and accentuated with the current level of annotation what is anticipated from today's bar forward?

@MACD
How would you expand this view into three timeframes?

Sprout, I can see that you have a scientific mind which wants predictability in all cases. You ask how I would know that the earnings would be bad and there would be a big sell-off at "bar 23". I can tell you that I certainly wouldn't know that (especially since I don't trade equities) but if I were that kind of trader it's not too farfetched to think that I might have done these fibonacci levels and said to myself 'what if I were to put in a buy order at that 261% level ($34.10) just in case the earnings were bad. If the order were filled I would be happy with the predictable bounce, and if it weren't I would have lost nothing and just canceled the order. But it's important to know in trading that there is little known in advance; there are only probabilities, and the fib levels offer favorable numbers at which to judge support and resistance. Here are three time frames if it make you more confident.

 

[peter2h]

Dear Peter, I don't think the three charts were really clear. Here's another view, just the one hour chart that was on the left side of the three. I have marked the points from which the Fib extensions were drawn. I hope this is clearer, and shows where the 261% level came from.

 

[Sprout]

Dear Peter, I don't think the three charts were really clear. Here's another view, just the one hour chart that was on the left side of the three. I have marked the points from which the Fib extensions were drawn. I hope this is clearer, and shows where the 261% level came from.

Thank you for the clarification. From those 3 points, Is there another tool that projects the possible long side?Does each tool project different possibilities or corroborate each other?

 

[Overnight]

True Fibbonaccis are absolutes. The Fibs we attempt to apply to market behaviors are relative to the behavior of the humans that engage in the markets. The science is bunk here. Fib has to do with the universe, not "humaniverse". Bugger all

 

[peter2h]

Thank you for the clarification. From those 3 points, Is there another tool that projects the possible long side?Does each tool project different possibilities or corroborate each other?

I hope the following chart doesn't drive you to despair but it is more challenging to work with larger time frames. That is the reason I like to work intraday. The three points that yielded the 261.8% (being high/low/high) will only give downside levels; we need a low/high/low swing to give us extension levels above the local high. And with such a big move down the only high above the day of the earnings report (bar 23) was the 423% in green on the following chart.

More highs can be found by looking at the price swings in the months prior to this event. I have color-coded them on the chart. The trick here is to look for coincidental numbers from different swings. For instance we can see that the number $41.49 comes up in two different clusters. This would make it possibly important as resistance if the price gets there at some point. There are others too. If we don't fear a ridiculous number of lines on the chart we could look for lower levels for possible support. (I find it very interesting that the 423.6% number from the original calculation is exactly (as far as my eye can see) the same as the top of the gap that resulted from an earnings surprise on April 6.)

 

[peter2h]

I hope the following chart doesn't drive you to despair but it is more challenging to work with larger time frames. That is the reason I like to work intraday. The three points that yielded the 261.8% (being high/low/high) will only give downside levels; we need a low/high/low swing to give us extension levels above the local high. And with such a big move down the only high above the day of the earnings report (bar 23) was the 423% in green on the following chart.

More highs can be found by looking at the price swings in the months prior to this event. I have color-coded them on the chart. The trick here is to look for coincidental numbers from different swings. For instance we can see that the number $41.49 comes up in two different clusters. This would make it possibly important as resistance if the price gets there at some point. There are others too. If we don't fear a ridiculous number of lines on the chart we could look for lower levels for possible support. (I find it very interesting that the 423.6% number from the original calculation is exactly (as far as my eye can see) the same as the top of the gap that resulted from an earnings surprise on April 6.)

To add to the preceding chart, look at what happens when we put on the retracements using the recent high and the low at the beginning of the rally in April. These nail nearly to the tick all of the swings that have occurred since then.

 

[HobbyTrading]

I'm sorry, I think I didn't understand your question. There are in fact many ways to calculate the fibs (retracements, extensions). The values are fixed within contexts due to their fractal nature.

You did reply to me, in post #19 of this thread. The Fibonacci ratios are fixed values and can not be calculated in multiple ways. Which prices you use to apply these ratios to is open for multiple interpretations.