HWCAdvanced Fibonacci Techniques & Studies

Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor 1
Advanced Fibonacci Techniques & Studies

Transitioning Out of Trading's Old (and failed) Paradigm
version 111 August !"1"
#n large numbers$ Fore% traders (who have been conditioned by the existing {old} and failed
trading paradigm)$ have used onl& 'ust a (raction o( the realit& o( Fibonacci in their trading
)ere$ &ou *ill learn valuable in(ormation regarding Fibonacci retracement levels$ +ro'ections$
e%+ansions$ For,-Fibo.s$ e%tended retracements$ and Fibonels /ombined$ the& +rovide an
arsenal o( trading resources *hich *hen ado+ted$ can trul& trans(orm a trader.s technical
chart s,ills
Steve Gregor
Founder 0 /hie( Strategist
Pi+/lubcom
SteveGregor1Pi+/lubcom
t*ittercom0stevegregor
Some images may be best viewed at 150% to 200%
2 !"1" Steve Gregor This *or, is licensed under the /reative /ommons Attribution-3o4erivs 5" 6n+orted License To vie* a co+& o( this
license$ visit htt+700creativecommonsorg0licenses0b&-nd05"0 or send a letter to /reative /ommons$ 181 Second Street$ Suite 5""$ San
Francisco$ /ali(ornia$ 9:1";$ 6SA
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor !
TABL !F "!#T#TS
Ob'ectives 5
#ntroduction 5
Paradigms <
Sage =arriage Advice 8
The >%isting$ Failed$ Paradigm 8
Fibonacci Levels ?
T&+es o( Fibonacci Studies @e.ll 4iscuss 1"
A Auic, 3ote Begarding /harts 1"
Standard Betracements 11
Pro'ections$ >%tensions$ and >%+ansions 1!
For, Fibo.s 1<
>%tended Betracements 18
Fibonels !1
Static /hart Su++ort Cand BesistanceD !;
Fibonacci /lusters$ )igh Percentage Beversals C)PBD$ and >nerg& Points !;
Fibonacci Precision 6sing )armonic @ave /onvergence
T=
!8
Get Free >6B06S4 PitchFor, Set-6+s !?
The EBollingF Fibonacci$ =ar,et Turnover$ and Shado* Bands !?
/andle @ic, or /andle /loseG 5!
@hat is the 4eal *ith the ;"H IalueG 55
S+ecial >lliott @ave Pro'ection Technique 55
Fibonacci )ome*or, Assignment 5;
Putting #t All Together J Trading @ith Fibonacci 5;
Fibonacci Levels J The Ialues 58
Summar& 5?
About Steve 5?
Besources =entioned 5?
A Auic, #ntroduction to The 3e* Paradigm7 )armonic @ave /onvergence
T=
59
!b$ectives
There are t*o +rinci+al ob'ectives (or this +a+er The (irst$ is to introduce a com+lete set o(
Fibonacci levels 0 values that the serious trader should be using (most traders are only using
portions of the reality of ibonacci in their trading)! Secondl&$ to +rovide an overvie* o( the
various *a&s Fibonacci realit& can be brought to the chartist or technical trader$ as again$
most traders are under-+er(orming *hen it comes to the +otentialit& o( Fibonacci-based$
technical anal&sis in their trading #n the end$ this should be the one-sto+-sho+ (all things
ibonacci) (or the intermediate to advanced trader in regards to Fibonacci in their trading
Please note that # am not going to +rovide the +ersonal histor& o( Leonardo Pisa Fibonacci
(though " find it very interesting and would encourage every trader to investigate such history
on their own) # am also not going to discuss seashells$ (lo*ers$ or bunn& counts to illustrate
the origin and +ervasiveness o( Fibonacci in our *orld There are other com+lete and readil&
(ound sources (or such in(ormation # +ersonall& believe the (ollo*ing site *ill contain more
in(ormation than one can digest on the to+ic o( Fibonacci J
htt+700***mathssurre&acu,0hosted-sites0BKnott0Fibonacci0(ibBiohtml
%nt&oduction
@hen # *as (irst introduced to currenc& trading$ # *as totall& clueless # mean$ there.s clueless
and then there.s clueless #.ll s+are &ou the detail here Cbut bare it all$ in de+th$ in m&
(orthcoming boo,$ #$armonic %ave &onvergence ' (eaving The Old orex Paradigm )ehind*
Fall !"1" JD$ but 'ust understand m& com+rehension o( the Fore% and m& trading$ *hen #
(irst started$ *as as naive and +rimitive as one could be But$ # *as driven and # *anted to
learn$ as the brie( introduction # had to currenc& trading gave me a sense o( em+o*erment
@ith the Fore%$ and (or the (irst time in a long time$ # (elt # had (ound Ethe ever&-manF solution
That is$ the o++ortunit& (or (inancial gain that *as +romised in so man& other areas J real
estate J multi-level mar,eting J and other home-based businesses$ *as actuall& seemingl&
E+ossibleF *ith the Fore% All one needed *as a com+uter$ an #nternet connection$ and a little
,no*ledge O( course$ that Elittle ,no*ledgeF *as the tric,& +art # *as hungr& # *anted it
badl& 6n(ortunatel&$ this desire on m& +art had a timing issue
The retail s+ot Fore% mar,et didn.t reall& o+en u+ until 199? So bet*een then and !"":$ it
*as still trul& in its in(anc& The continued e%+losion o( the #nternet$ combined *ith the t&+ical
earl& ado+ters (greedy mar+eteers), led to a realit& that is even *orse toda& And that is$ i( #
sa* it$ # believed it =& strong desire to succeed as a currenc& trader essentiall& blinded me
6n(ortunatel&$ this is in large +art$ the +rinci+al contributor to the old-+aradigm itsel( Let me
e%+lain As a quic, e%am+le$ i( # *ere to sa&$ (ill in the blan, in the (ollo*ing J #-espite the
abundance of training materials, the reality is ../ of all traders fail*$ &our ans*er *ould most
li,el& be E9;HF And it *ould be that because &ou have seen it$ read it$ heard it 6n(ortunatel&$
it.s quite incorrect Let$ &ou have believed it$ internaliMed it$ and (iled it a*a& (or &our
subconscious to +la& *ith as it desires So$ here.s the (irst realit&-chec, *e.ll introduce J the
realit& is$ it.s not the traders that (ail Lou can ta,e the most ambitious$ dedicated and
committed trader$ *ho +uts in the time in +ro(essional training$ does his +ractice trading$ has
s+eci(ic stud& times$ and uses the best (of +nown) strategies taught$ but i( he is on a dead-
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor :
end road$ he.s not going to get an&*here 0re you following1 The realit& is$ it.s not the trader
that (ails$ it.s the road that he is +ut u+on that (ails On the other hand$ &ou can ta,e an
average Noe$ +ut him on a road that does lead to some*here$ and most o( the time$ he *ill
(ind his *a&
To advance as a trader toda&$ &ou must be *illing to let go o( much o( *hat &ou have been
taught (or thought) *as real$ as it *as +resented (rom the +ers+ective o( a (ailed +aradigm
#t.s li,e the e%isting +aradigm has an ego o( its o*n #t.s not going to admit it is the (ailureO it
*ill tr& to ma,e itsel( (eel better b& blaming incom+etent traders But let me reassure &ou$ if
the existing paradigm was worth a salt, there wouldn't be a 95% failure rate That.s the
O3LL +roo( *e need to discuss at this +oint O( course$ this e%isting +aradigm$ ego in to*$ is
going to tr& to convince &ou that nothing is guaranteed$ and that &ou 'ust have to rise above
the others to be success(ul #( &ou *ere going to visit an old college (riend in a distant to*n$
and sa* a sign that read$ #23/ of the travelers on this road do not ma+e it to their
destination* J *ould &our res+onse be that &ou should (ight hard and be a better driver than
9;H o( all drivers$ or *ould &ou sim+l& sa&$ #"t's time to get off this road and find a different
way to my friend's house*G So (or me$ it *as obvious$ i( 9;H o( the +eo+le (ail on the road #.m
traveling$ # need to travel do*n a di((erent road %hat do you thin+1 So$ m& e((orts the +ast
(e* &ears have been based u+on hel+ing traders that *ant to succeed to move out o( the
(ailed$ e%isting (old) +aradigm$ and transition into the ne* +aradigm o( Fore% trading 0re you
ready to get on board that train1
As humans$ *e have this incredible$ +h&siological realit& ,no*n as the Beticular Activating
S&stem (or #405*) There are man& *a&s to loo, at BAS$ but the one # *ould li,e to address
here is ho* BAS can allo* us to have incredible (ocus *hen necessar& and im+ortant
Picture &oursel( *al,ing through a bus&$ large metro+olitan air+ort terminal Lou have
thousands o( +eo+le moving aboutO there.s the gu& (loor-+olishing 'ust ;" (eet a*a&O the
+astr& ,ios, has loud music +la&ingO little carts carr&ing elderl& travelers are bee+ing their
horns in an attem+t to navigate the cro*dsO and &et &ou hear$ #0ttention 5outh%est light
6789 to 5acramento passengers, your gate has moved and you will now be boarding at :ate
;6*! Lour inner brain ,ne* &ou *ere on Flight 1?8:$ and BAS someho* allo*ed &ou to hear
that +ublic-address announcement over all the other noise +resent #n (act$ i( &ou *ere on a
cell +hone tal,ing to a (riend$ the& *ould be totall& over*helmed *ith all the noise the& hear$
as cell +hones don.t have an BAS ca+abilit& and cannot (ilter out one +articular sound over
another
Another great e%am+le o( BAS can be recogniMed b& almost ever& +arent *ho *as read& to
have their (irst child There.s the e%+ectant mother$ ? months and 5 *ee,s +regnant$ so
an%ious (or the big da& to come$ and *hether she goes to the grocer& store$ the mall$ or 'ust
do*n the side*al, to *al, the dog$ ever& other *oman she sees is 9-months +regnant The
realit& is$ the +ercentage o( *omen 9-months +regnant in the general +o+ulation did not
statisticall& change to be timed *ith this ne* mother.s +regnanc&$ but her BAS *as so
attentive to her situation$ that.s *here her (ocus *as$ and that.s *hat she sa*
6n(ortunatel&$ BAS has its do*nsides$ es+eciall& in the learning +rocess$ and es+eciall& in
the trading realm Bight no*$ man& o( &ou are missing the (oundation o( m& discussion on
BAS$ merel& because &our BAS is so (ocused on getting to the in(ormation about Fibonacci
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor ;
/ircling bac, to m& +ersonal 'ourne& *ith the Fore% J # *as so hungr& to learn that an&one
*ho a++eared to sa& an&thing about the Fore% (above and beyond that which " thought "
+new) *as$ to me$ a credible source The realit& *as$ because o( m& BAS$ their credibilit&
*asn.t even questioned =& BAS *as so (ocused on s+onging-u+ the required ,no*ledge to
be a great Fore% trader # 'ust assumed$ i( someone *as tal,ing$ the& ,ne* about *hat the&
*ere tal,ing That BAS *as so strong$ that it didn.t let logic +revail # *asn.t thin,ing about the
#nternet e%+losion or greed& mar,eteers e%+loiting (ol,s li,e me
The bottom line J our BAS$ designed to +rotect and hel+ us in most situations$ can o+erate
in direct con(lict *ith the learning +rocess /ombine that *ith a mar,et so ri+e (or e%+loitation$
and &ou have a disaster in the ma,ing One o( the *a&s # have gained (ul(illment in the Fore%$
outside o( m& +ersonal trading$ has been in the area o( m&th-busting B& that$ # mean$ ta,ing
+ieces o( *hat is +ortra&ed as trading *isdom and totall& debun,ing it into the nonsense that
it is J sometimes to the shoc, o( traders$ *ho no* (eel embarrassed that the& could have
been suc,ered into believing that tidbit had an&thing to do *ith *isdom in their trading
And # (eel com+elled to be this Fore% trading m&th-buster$ merel& because the general
mar,et+lace continues to be not as # entered it$ but no*$ even *orse
The birth o( the s+ot Fore% mar,et created o++ortunit& There are al*a&s those that ,no* the
best *a& to learn a li(e-s,ill are to be mentored Les$ there are boo,s on martial arts at the
librar&$ but how many really great blac+ belts were self<trained1 There are great 4I4.s on
+la&ing tennis$ but how many of the Top<6== players in the world are self<taught tennis
players1 All o( the To+-1" ran,ed +la&ers have their +ersonal coaches So the ne*l& birthed
Fore% mar,et needed teachers 5o where did the first orex teachers come from1 The stoc,
mar,et$ that.s *here # remember m& (irst +rinted Fore% training materials$ and large +ortions
o( them *ere +ulled directl& (rom stoc, mar,et trading teaching materials @hile there are
some (oundational similarities$ much o( the *isdom being +assed on *as 'ust not relevant
The +roli(eration o( the #nternet led to the increased +o+ularit& o( message boards$ +ublic
(orums$ and other (orms o( accessible communication to *hich an&one could +ost =ost o( the
+osts (rom m& earl& da&s to those *hich # see toda& are (rom either the least e%+erienced
traders or e%+erienced traders *ho are so entrenched (405) in their methodologies that the&
have no mind (or other +ossibilities Let$ this is *here the masses go (or their insight #( # didn.t
see it (or so man& &ears no*$ # *ouldn.t believe it m&sel( 3o*$ # surel& am not attac,ing such
(orms o( in(ormation there are dedicated (orums *hich serve great +ur+ose so # am
generaliMing a tad here But the realit&$ the challenge (or the driven$ #" want more!!!!* trader$ is
that the ErealF *isdom the& see, is o(ten hidden$ not available$ or com+letel& over-shado*ed
b& +artiall& or com+letel& inaccurate in(ormation 6n(ortunatel&$ this realit& is true at all levels$
(rom the shadiest Fore% teaching academ&$ to the regulator& bodies that oversee the Fore%
trading realm @e.ll +rovide solid +roo( o( this later
For no*$ &ou are here to gain advanced ,no*ledge on the use o( Fibonacci in &our trading
Lou are (ortunate to have (ound this document C+artial cha+ter (rom E$armonic %ave
&onvergence ' (eaving The Old orex Paradigm )ehind* Fall !"1" JD$ as it contains a gold-
mine o( in(ormation # don.t sa& that in a boast(ul manner @ell$ actuall&$ ma&be # do Let me
re+hrase that J &ou *on.t (ind the in(ormation &ou (ind here in one location an&*here else in
the *orld toda& And that.s because it has been com+iled (rom m& +ersonal trading +ursuits
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor <
over a si%-&ear s+an during *hich # have sta&ed dee+l& entrenched in the research o(
Fibonacci
)ere.s a sim+le test J go Google #ibonacci retracement levels*$ or #ibonacci levels* or
ho*ever else &ou ma& *ish to *ord &our search @rite do*n all the levels &ou discover
There *ill be +lent& o( 5?!H$ ;"H$ and <1?H (and at that repeated and repeated over and
over again) )ut seriously, what numbers do you come up with1
@hat # reveal in this cha+ter on Advanced Fibonacci o((ers great enhancement to most
traders. abilities )o*ever$ not ever&thing # discuss *ill be able to be ado+ted$ (or one reason
or another$ b& all traders Additionall&$ this is 'ust one cha+ter o( a larger *or,$ so # 'ust do not
have the s+ace to reveal all o( the Ehoo,sF into some o( *hat # discuss here (such as the
relationship between $armonic %ave &onvergence
T>
and ibonacci levels) But *hile #
cannot com+letel& transition &ou (in ?ust this document) out o( the e%isting$ old-+aradigm
thin,ing in regards to currenc& trading$ *e can at least start
)ere.s a #smac+<you<in<the<face* realit& J there are more numbers (ibonacci levels) than
*hat &ou discovered *ith &our Google searchP And those numbers are in and on &our charts
right no* Nust because LO6 don.t see them$ does not mean the& are not there And more so$
'ust because &ou do not see them$ does not mean the& do not dictate and (ollo* +rice
movement *ith equal +o*er to 5?-;"-<!
#n other *ords$ the +o*er o( this document is that &ou *ill no* have the abilit& to see those
other lines that do im+act +rice and to understand dee+er relationshi+s *ithin the *orld o(
Fibonacci and technical trading #n summar&$ # *ish someone handed me this document *hen
# *as in m& (irst-&ear o( tradingP >n'o&P # al*a&s *elcome and en'o& (eedbac,$ so (eel (ree to
+rovide me &our thoughts$ comments$ criticisms$ and com+limentsP
'a&adigms
To ensure *e are on the same +age$ a (a&adigm is nothing mo&e than the (e&ceived
)now*edge o+ a given time dictating the be*ie+s o+ those in that time /ase in +oint$ at
one time$ the earth *as +erceived to be (lat$ or li,e a cube Sail (ar enough$ &ou (all o( the
edge That re+resents a collective +aradigm There are also individual$ vested +aradigms An
e%am+le o( this *ould be the +ro(essor *ho has +reached and taught a +articular theor& (or $
:" &ears into his career$ onl& to have some &ounger scientist discover and +rove a di((erent
realit& #t.s ver& hard$ consciousl& and subconsciousl&$ (or that older +ro(essor to 'um+ on the
ne*l& discovered +aradigm$ as his entire li(etime o( *or, *as vested in the old +aradigm
Nust realiMe the same realit& e%ists toda& in the Fore% arena =an& trading (oundations (#the
trend is your friend*, #you must have at least ;@6 reward<to<ris+*, #the Auro session is the best
time to trade*, and so on) e%ist merel& because that is *hat is heard and re+eated "f it is
said, it must be !!! right1 That.s the +roblem *ith a +aradigm$ es+eciall& the (ailed ones J it
has a strong tendenc& to be sel(-+romoting and there(ore$ sel( +er+etuating
Sage ,a&&iage Advice
Be(ore *e (ull& immerse ourselves in all-things-Fibonacci$ # *ant to revie* some sage
marriage advice +assed on to me b& some elders *hen # *as getting married #t.s tongue in
chee, in some *a&s$ but also no* re+resents m& +ersonal a++roach to trading And this can
become com+licated +rett& (ast$ *hich is *h& it is hard to se+arate one cha+ter out o( a boo,
and still be success(ul *ith the message 3onetheless$ that sage *isdom$ initiall& given to a
man in regards to his ne* bride (but of course, eBually applicable in the reverse
consideration) J
Would you rather be right, or would your rather be happy?
Again$ no o((ense intended$ so +lease minimiMe the com+laints #n terms o( a relationshi+$ this
merel& sa&s one ma& be better o(( to +lace their ego on the shel( in order to ,ee+ balance in
their relationshi+ J to not micro-manage the detail (or the sa,e o( being right @e.ve all had
those e%+eriences #There, " showed her* J onl& to end u+ slee+ing on the couch that nightP
%as that personal #victory* really a victory after all1 %hat's more important in terms of the
relationship1 O,a&$ ma&be that *isdom$ 'o,ingl& +assed on to me$ *asn.t that tongue-in-
chee, a(ter all
#.ve ta,en that *isdom and a++lied it to m& trading # reall& don.t care @)L things *or,$ as
long as they wor+ consistently and generate winning trades, " will be happy! This *as not m&
stor& earl& on # had to ,no* @)L something *or,ed in m& trading # s+ent countless hours
attem+ting to (igure-out (ormulas$ or rationaliMe this or that @asted time Lou see$ at the end
o( the month$ the bills don.t get +aid b& the de+ths o( the minutia in m& trading trivia$ but b&
the +i+s com+ounded in the ban, 0re you with me1 # ho+e so #( &ou are a T&+e A +ersonalit&
(first born, doctor, lawyer, fighter pilot, etc!), this is going to be a bit o( a struggle (or &ou Nust
trust me$ certain things are better 'ust to acce+t This does not mean to be gullible
(referencing the learning process discussed regarding the old<paradigm)$ but rather i(
something is *or,ing$ 'ust use it to &our advantage instead o( tr&ing to (igure out ho* it *or,s
A cursor& understanding is 'ust (ine$ but to reinvent the *heel is not &our ob'ective as a Fore%
trader This does not mean to 'ust blindl& acce+t things$ but i( &ou tr& them and the& *or,$
then ado+t them and move on
To this end$ *hat # do *ith Fibonacci ma& not be understood b& all 4on.t struggle *ith it Nust
acce+t it rather than tr&ing to re-invent the *heel$ and 'ust a++l& it to &our trading and get
great resultsP
The -isting. Fai*ed. 'a&adigm
O,a&$ #.ll 'ust come out and sa& it @hile there is merit and some realit& to man& as+ects o(
the e%isting +aradigm being taught and traded in the Fore% mar,et$ most o( the EtruthsF are
about as valid as the belie( the earth *as (lat ;"" &ears ago But there is reason (or some o(
this Let me tr& to e%+lain
As an e%am+le$ the reason the +revailing #the trend is your friend* mindset is there is merel&
because the tools are not there to measure the +recision o( +rice movement J at least as
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor ?
available in the +revailing technolog& The vast ma'orit& o( technical studies and resources
have a strong lagging attribute >ven attem+ts to get creative on this issue$ such as Nura, or
)ull =A.s$ still have lag The realit& is$ i( the& *ere more +recise$ there *ould be no need (or
;"-+i+$ 8;-+i+$ 1""-+i+$ !""-+i+$ or even larger$ sto+-losses And +uh-leM$ do not go to do*n
the road o($ #Cou have to increase the siDe of the stop as you increase time frames because
the fractals grow in siDe, too* J that *ould be a most-incrimenting comment directl&
attributable to the e%isting$ (ailed +aradigm J and again$ stated merel& because the tools are
not there (in the existing paradigm) to measure *ith an& degree o( +recision
)ere.s the bottom line on the in(luence o( the e%isting$ (ailed +aradigm on Fibonacci Because
the e%isting +aradigm does not generall& have the tools to measure +recision$ the need (or
additional Fibonacci levels ma& seem questionable # *ould agree$ i( one acce+ts the
+remise But that.s a large reason *h& &ou *ant to leave the e%isting$ (ailed +aradigm
The ne* +aradigm trader understands the realities o( +rice movement #t is not random Price
moves in ver& +recise and measurable harmonics And ever& (AEA4C) trend move e%hausts
at a +oint o( )armonic @ave /onvergence
T=
J (or *hich there AB> real-time indicators to
+recisel& measure that trend e%haustion J all o( *hich em+o*er the trader in *a&s not
understood b& the e%isting$ (ailed +aradigm trader
Fibonacci Leve*s
@hat # am (raming as Fibonacci levels are merel& a set o( +ercentage-numbers that$ (or the
most +art$ have some sort o( Fibonacci relationshi+ (being a mathematical derivative thereof),
but *hen a++lied to +rice movement create +otential su++ort and resistance +oints in (uture
+rice movement # have not EcreatedF or EderivedF an& o( these values # merel& did an
e%haustive search o( those *ho have and then Ecom+iledF a set o( Fibonacci values (levels)
that at various times turn +rice (or cause price to breath, retrace, etc!)! # use these values in
m& +ersonal trading 'ust because the& turn +rice That.s ALL # need " am $0PPC with that
alone!
#n this sense$ # am tal,ing about Ebeing ha++&F versus Ebeing rightF # reall& don.t care )O@
the original use o( a +articular Fibonacci level that # use *as being im+lemented # sa* it *as
used in one *a&$ # +ut that line on m& chart$ and # see hard bounces on0(rom it over and over
That.s all # need to ,no* to continue to use it Let.s ma,e some sense o( this J
#n 19!!$ Gartle& +ublished a boo, on +atterns he sa* *hen charting (inancial +rice
movement =an& have heard o( EGartle& +atternsF #n the late 199".s and on*ard$ a trader b&
the name o( Scott /arne& greatl& im+roved the traders. +otential use o( these +atterns @ith
/arne&.s research$ charting$ trading$ and +ublishing
1
$ several ne* retracement0+ro'ection
values *ere made available # trul& believe the industr& o*es /arne& a lot more credit than he
+robabl& has received (or sharing his research and trading results
# have also studied some o( Nim Kane.s *or,s
!
and can re+ort that he de(initel& goes through
the math o( the derivation o( both retracement and +ro'ection numbers Personall&$ # thin, he
1 Harmonic Trading of the Financial Markets: Volume One by Scott M. Carney. HarmonicTrader.com C ! "##$
" %d&anced Fibonacci Trading Conce'ts by (im )ane. )aneTrading.com ! "##* (ames (. )ane
should be held u+ there *ith Fibonacci himsel( (or some o( his derivations that trul& nail +rice
movements An& serious student o( Fibonacci trading (or trading in general) should at some
+oint become a student o( Kane.s *or,s Csee htt+700***KaneTradingcomD /arne& and
Kane both directl& ac,no*ledge their *or,ing together to derive additional Fibonacci levels to
e%+lain +rice movements the& have observed on the charts
The bottom line$ *hat /arne& did *as statisticall& demonstrate high +robabilit& mathematical
relationshi+s (or the various reversal +oints o( those harmonic chart +atterns Some o( these
termination +oints utiliMe values most traders are (amiliar *ith J other values come merel&
(rom /arne&.s o*n trading e%+erience (and wor+ with Fane)$ but +rove themselves as +attern
termination +oints
# am not advocating one having to master /arne&.s com+lete *or, o( harmonic chart +attern
techniques in order to access advanced Fibonacci levels and valuesO ho*ever$ a reading o(
/arne&.s *or, ma& indeed interest &ou in +ursuing his strategies @hat is contained in this
cha+ter *ill surel& onl& com+liment /arne&.s harmonic chart +attern trading$ i( it is something
&ou do elect to +ursue As *ith Nim Kane$ # do thin, traders li,e /arne& *ho have contributed
so much to our industr& should be recogniMed # (ull& a++reciate the as+ects o( m& trading that
# can attribute to /arne&.s and Kane.s e((orts For more in(ormation on /arne&.s )armonic
/hart Patterns and Fibonacci relationshi+s$ or in(ormation regarding /arne&.s boo,s$ visit
htt+700harmonictradercom
@hat # loved about (inding /arne&.s *or,$ is that it validated something # had been doing (or
&ears /arne& no doubt discovered (orms o( these techniques &ears in advance o( me$ but
sometimes (inding all the research that e%ists can be a challenge 3onetheless$ # had a
EFibonacci e%+erienceF (discovery) that has introduced ne* *a&s o( using Fibonacci levels #
too, this discover& to some o( the leading traders in the industr&$ (ol,s *ith !" to 5; &ears o(
e%+erience$ and the& too agreed it *as rather intriguing =ore to come later on this sub'ect
Be(ore *e get to the numbers (ibonacci levels G values)$ the reader must (irst recogniMe that
m& use o( the Fibonacci levels and that o( the t&+ical trader ma& be a little di((erent O(
course$ # understand most traders are stuc, in the old$ (ailed +aradigm$ and # am trading in the
ne* +aradigm J so # don.t e%+ect the same use o( Fibonacci levels across the board
Again$ the main reason # *ill have =OB> levels0values is because # have +recise$ real-time
indicators that allo* me to have more detail in *hat # can see on the charts Better said$ in
short distances$ lagging indicators are essentiall& useless Because o( that$ there has been
little *or, to advance the Fibonacci levels dragged-over (rom the stoc, mar,et traders *ho
initiall& *here trading and teaching currenc& trading
But *ith the added values that /arne& and Kane have contributed to the realm o( Fibonacci
values 0 levels$ # have a com+lete suite o( numbers that accuratel& de(ine +rice reversal
+oints
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor 1"
Ty(es o+ Fibonacci Studies /e0** 1iscuss 2
There are several di((erent t&+es o( Fibonacci studies (application of ibonacci to create
potential support and resistance price points on the charts) *e *ill discuss in this cha+ter7
Standard Betracements
Pro'ections
>%+ansions
For,-Fibo.s
>%tended Betracements
Fibonels
Some o( these studies carr& di((erent names else*here # have ado+ted the names # use
because # believe the& best describe the studies # am using And since # introduce a (e* more
than commonl& (ound (or better said, have combined several, different studies)$ # needed to
have names that made sense *hen com+aring one t&+e o( stud& against another
A 3uic) #ote 4ega&ding "ha&ts
Over the &ears$ because # *as a vested trader$ strong researcher$ and +ersistent coach to
man&$ # had a continuous search (or the most com+rehensive +ro(essional trading charts # *ill
note ever& trader has their (avorite$ but # +ersonall& use a *hite-label version o( FQ Tre,.s
#ntellicharts$ ,no*n at Pi+/lub Pro/harts (available at Pip&lubPro&harts!com)! The
Pro/harts have the abilit& to im+lement all o( the Fibonacci studies # desire to use in m&
trading$ and do it in a ver& +o*er(ul (ashion # +ersonall& created the im+lementation (or Auto-
Fibonels in Pi+/lubPro/harts to accommodate these advanced Fibonacci levels (well, it was
my design, the good fol+s at H Tre+ did the implementation)!
#( &ou are stuc, *ith =T: charts (or the sim+le reason the& are (ree$ &ou are missing the boat
at the larger +icture level in regards to success as a Fore% trader Better said$ i( &ou use =T:0
=T; onl& because that is *hat &our budget *ill allo*$ &ou should not be trading currenc&
There are man& great attributes to the =T: +lat(orm and trading communit& (much of which
comes from the large volume of custom<indicators readily available)! )ut has having 3;8 &"'s
on your charts produced the income you desire from your trading1 # vie* m& e((orts in the
Fore% as m& o*n trading com+an& #n m& head$ # am />O o( Steve Gregor Fore% Trading To
that end$ # *ould not have sought or acce+ted that />O +osition *ithout realiMing # had the
+otential to head a R;= or R1"= (or even larger) com+an&P # also have enough *isdom (the
grey hair sprouting on the temples has to be good for somethingI) to ,no* that R1"=
com+anies do not get to that siMe *ithout some e%+ense Personall&$ # have had com+anies
and +ro'ects in m& +ast that had to ma,e R1"$""" be(ore # could +ut (ood on the table (that
was their monthly brea+<even based on expenses to float the business)! So i( &ou are loo,ing
at achieving greatness as a trader$ 'ust realiMe (orcing &oursel( to go the E(reeF route ma& also
limit the success &ou ma& achieve #( &our generaliMed res+onse is$ #" cannot afford
professional charts*$ then &ou are not read& to be trading the Fore%
Lastl&$ # *ill state # used to be on =T: # traded it side-b&-side *ith other charts There are
numerous inherent issues *ith =T: *hich # *on.t detail here$ but there is a reason # *ent to
#ntelli/harts (and then later enhanced those "ntellicharts creating Pip&lub Pro&harts) And
that is the& +rovided much more accurac& @hen &ou *ant to have +recision$ accurac& is
im+ortant And the reason # *anted +recision$ is it *ould allo* tight sto+s (and using tighter
stops without decreasing the win percentages) And the reason # *anted those tight sto+s J
more +ro(its than m& +eers in the ver& same trades And *hen &ou com+ound Emore +ro(itF$ it
becomes staggering +rett& (ast
# des+eratel& *anted m& com+lete trading environment on =T: (or man& reasons (particularly
because it was mar+et dominant, " felt " could reach more traders)! # s+ent a lot o( mone& in
an attem+t to have it run there And *hile # *as able to du+licate the s&stem J indicators and
all$ the di((erences in various bro,ers. +rice (eeds rendered it less-than-o+timal Again$ # am
not out to +rove right or *rong$ # 'ust go *here the +i+s are Lou ma,e &our o*n decisions
A(ter all$ &ou are />O o( &our o*n trading com+an&$ tooP
So$ *ith the charting +lat(orms discussion out o( the *a&$ let.s gra+hicall& loo, at the use o(
each o( the various t&+es o( Fibonacci studies one can do$ starting *ith a standard
retracement
Standa&d 4et&acements
3othing ne* here$ this is Fore% Trading-1"1 There.s a +ronounced move$ starting *ith a
s*ing-lo* and going to a s*ing-high (or swing<high going to a swing<low) and so *e grab our
Fibo-tool and stretch out the trend (rom start to (inish @e then loo, at the +ull-bac,
+ossibilities$ *ith t&+ical em+hasis on 5?H$ ;"H$ and <1?H retracements There are tons o(
strategies based on these Fibonacci levels$ but the over-riding thin,ing is the retrace *ill end
in this area and the move then continue in the original direction o( the trend
From an >lliott @ave +ers+ective$ there are assigned statistical +ercentages to the degree
(percentage) o( +ull-bac, based on the *ave count #.m not covering >lliott @ave in this
cha+ter (but will reference it, for sure)$ but as an e%am+le$ @ave ! is ,no*n to +ull-bac,
s*i(tl& and dee+l&$ and has a higher +ercentage o( moves retracing to the ;"H to <!H mar,
@e also ,no* the >6B06S4 o(ten *ill +ull bac, to 8?<H on a @ave ! @ave : +ull-bac,s *ill
statisticall& be shallo*er and slo*er (compared to %ave ;'s) and more +revalent in the 5?!H
to ;"H range$ e%ce+t in h&+er-e%tended @ave 5.s$ *here the @ave : +ull-bac, ma& struggle
to reach even !5<H #( &ou haven.t guessed$ #.m hinting that a minimal ,no*ledge o( >lliott
@ave *ill indeed hel+ &ou better understand$ *ith higher +robabilit&$ *here +ull-bac,s ma&
terminate
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor 1!
/hart b& Pi+/lub Pro/harts C*hite-label FQ Tre, #ntelli/hartsD
Some >lliott @ave retracement insight (rom eSignal
5
@e t&+icall& e%+ect onl& 1!H o( @ave !.s to hold 5?H retracements o( @ave 1
@e antici+ate 85H o( @ave ! retracements bet*een ;"H and <"H
@e antici+ate 1;H o( @ave !.s to retrace be&ond the <!H
@e can antici+ate onl& 1;H o( the time @ave : to retrace bet*een !:H to 5?H
@e can antici+ate <"H o( the time @ave : to retrace bet*een 5"H and ;"H
@e can antici+ate 1;H o( the time @ave : to retrace bet*een ;"H and <!H
@hile these ,inds o( statistics are indicative that a little >lliott @ave ,no*ledge ma& be hel+(ul
to the trader$ there still remains the challenge o( ,no*ing *hich time a +articular retracement
is (alling into *hich statistical categor& #n m& +ersonal trading$ this is resolved *ith the use o(
)armonic @ave /onvergence
T=
$ *herein # can measure a *ave termination +oint$ t&+icall& to
*ithin a 5-+i+ to ;-+i+ Mone
'&o$ections. -tensions. and -(ansions
)aving coached literall& hundreds u+on hundreds o( traders$ # have observed that the use o(
Fibonacci in +ro'ections is +robabl& one o( the most under-used trading techniques b& the
average Fore% technical trader @e (ind ourselves so (ascinated *hen *e see a trend +ull-
* O&er&ie+ of Fibonacci and ,lliott -a&e .elationshi's by Marc .inehart. %d&anced /,T Trading Strategies. "01(an1#$
bac,$ to-the-+i+$ during a retracement C+art o( that$ #Oh yea, you really thin+ the mar+et is
completely random* sarcasm in the de+ths o( our mindsD$ &et *e (ail to realiMe that Fibonacci
is no-less accurate *hen loo,ing at +ro'ections 5o put those pro?ections on your chartsI
A +ro'ection is merel& anal&Ming the +ossibilit& that +rice movement$ a(ter a retracement$ *ill
+roceed in the original direction o( the trend$ moving u+ +ast and be&ond the original +oint o(
retracement
From a mechanical as+ect$ this means that a (uture$ +otential +rice +oint$ has a direct
relationshi+ to a +revious +rice +oint$ but more so$ to the s*ing-lo* to s*ing-high (or swing<
high to swing<low) *ave And so$ to im+lement a +ro'ection on our charts (depending on
charting platform)$ *e sim+l& use our +ro'ection tool and a++l& it to the *ave *hich has
com+leted$ and +ro'ect a (uture +rice be&ond the *ave *hich has Fibonacci relationshi+s
based on the length o( the *ave These (uture +rices then become e%cellent +otential su++ort
and resistance$ as +rice *ill o(ten stall or reverse at these +oints (and can then be used for
profit<ta+ing, stop<loss advancement, etc!)!
For the average trader$ #.ve come to learn that a good *ave candidate (or a +ro'ection is one
that has had at least a 5?!H retracement
3o*.s a great time to tal, 'ust a little about m& +ersonal +ers+ective regarding >lliott @ave #
am absolutel& convinced there is great merit (in terms of compliance with rules and
guidelines) *ith >lliott @ave Theor& *hen a++lied to technical anal&sis # am also absolutel&
convinced # *ill never be an elliottician$ immersed in the de+ths o( *ave counts at multi+le
levels at an& given time #.ll bo* and give homage to those traders and anal&sts *ho have
amassed the 1"$ 1;$ and !" &ears o( e%+erience that # believe is necessar& to be a consistent
>lliott @ave anal&stO it.s 'ust not the +ath (or me # *on.t go as (ar as to dismiss the +otential o(
>lliott @ave and rest on those laurels because the entire >lliott @ave thing is +ur+orted to
merel& be a Etheor&F #.ve observed *a& too much in m& trading (or >lliott @ave to merel& be a
theor& #( some o( the na&-sa&ers *ould 'ust trul& listen to *hat # have sa&$ their thin,ing
regarding >lliott @ave ma& change (for the better)!
)o*ever$ # 4O use +ieces o( >lliott @ave in m& trading Becall as # started this cha+ter$ #
tal,ed about being right or being ha++& And$ in terms o( trading$ being ha++& meant E+i+s-in-
the-ban,F # a++l& this thin,ing to m& +ersonal use o( >lliott @ave$ as *ell # am not going to
get hung u+ on *ave counts # am not going to get discombobulated in m& thin,ing because a
*ave count gets corrected$ or (li+s$ or Eis con(usedF at the moment But # *ill use the +ieces o(
>lliott @ave that ma,e sense to me in a general trading *a& And that includes both
retracements and +ro'ections and more so$ the values (or those retracements and +ro'ections
#.ll 'ust (lat-out state that a solid research o( the +revailing technical anal&sis material
regarding >lliott @ave +ro'ections (alls into t*o cam+s$ *ith substantiall& di((erent a++roaches
(or the +ro'ected +rices in each o( those cam+s
As in the case o( a com+leted @ave 1 being used to +ro'ect a @ave 5$ the methodolog& *e
covered above *ould +revail in one o( those cam+s @ave 5 *ould be seen as 1""H-based
u+on the length o( @ave 1$ and nothing else
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor 1:
But there is another cam+$ and this cam+ re(ers to such a +ro'ection as an Ee%+ansionF #n
some *a&s$ this ma,es sense to me$ but it.s (requenc& o( re(erence in available material is
ma&be one-(ourth that com+ared to +ro'ections
An e%+ansion also uses the length o( @ave 1 to +ro'ect a @ave 5$ but then a++lies that length
and resulting +ro'ection to the termination +oint o( @ave ! Again$ # li,e the logic o( this #t
sa&s that the im+ulsive nature o( @ave 1 has a corres+onding relationshi+ *ith @ave 5$ &et
that @ave 5 *ill also be de+endent on the de+th o( the +ull-bac, in @ave ! @hen &ou listen
to it$ see it$ and thin, about it$ it does ma,e some sense
So$ some traders are taught an >lliott @ave 5 is t&+icall& 1<1?H (as an example of one of
several potential ibonacci levels) o( @ave 1 Others are taught that @ave 5 is indeed that
1<1?H o( @ave 1$ but a++lied to the termination o( the +ull-bac, in @ave ! Obviousl&$ these
t*o +ro'ections lend themselves to di((erent$ (uture +rice +oints
This is *here # can care less about *ho is right All # ,no* is there are t*o +otential
methodologies (or determining +oints *here +rice ma& stall or be turned-a*a& To me$ it.s
more data to hel+ me +otentiall& better understand *here +rice *ill turn To be honest$ in m&
observation o( a++l&ing it all together (Alliott %ave, pro?ections, expansions), # have (ound
times *here the @ave 5 structure *as better (orecasted b& +ro'ections$ and times *here the
@ave 5 structure *as better (orecasted using e%+ansions Again$ # reall& don.t care *hich
cam+ is technicall& right Personall&$ # use both Lou can choose a cam+$ or &ou can do as #
do
Becall earlier # mentioned that # have given names (or some things based on *hat the& are
This re+resents one o( those times J *here # have commonl& seen E+ro'ectionsF re(erred to
in the literature # have le(t as E+ro'ectionsF Sometimes the& are called Ee%tensionsF To me$
the& are both the same$ and so # re(er to them both as E+ro'ectionsF )o*ever$ it can be
con(using a(ter that As an e%am+le$ =T: s+eci(icall& labels Ee%+ansionsF 'ust as *e have
de(ined it in our e%+lanation o( e%+ansions above But *hen FQ Tre, re(ers to E+ro'ectionsF$
the& are doing e%+ansions Nust don.t let the terminolog& con(use &ou The technical anal&sis$
be it using 'ust @ave 1 or including @ave !$ to hel+ +ro'ect @ave 5$ is *hat it is@e.ve used
some >lliott @ave here merel& to illustrate there can be di((erent *a&s o( a++roaching
+ro'ections #( &ou cannot s+ea, >lliott @ave$ don.t *orr& # +ersonall& don.t care *hat a *ave
is labeled (the #count*)$ or even i( # have the *ave structure +er(ectl& absolute (again, " am not
desirous of meeting the perfection or compliance for which an elliottician may demand) # 'ust
(ind a nice-loo,ing *ave structure$ loo, (or a 5?H retracement$ and a++l& BOT) a +ro'ection
and e%+ansion to derive +otential$ (uture su++ort and resistance barriers in the direction o( the
original trend But *hat # *ill use (rom >lliott @ave$ is the +ro'ection level values Those
+ercentages are indeed in m& Fibonacci tool settings The li,elihood o( an& one o( those
+ro'ected values *ill increase *ith additional studies$ creating *hat # call a high-+robabilit&
reversal C)PBD Mone @e.ll cover this later
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor 1;
/harts b& Pi+/lub Pro/harts C*hite-label FQ Tre, #ntelli/hartsD
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor 1<
@hile there are numerous sources (or s+eci(ic Fibonacci levels0values$ (or the minimall&-
educated >lliott @ave enthusiast # *ill again re(erence a *or, (rom eSignal that tal,s to
(requenc&
Some >lliott @ave +ro'ection insight (for %ave J) (rom eSignal
5
Onl& a++ro%imatel& !H o( the time *ill a labeled @ave 5 be less than @ave 1
@e antici+ate 1;H o( @ave 5.s trade bet*een 1"" and 1<" o( @ave 1
@e can antici+ate :;H o( the time @ave 5.s *ill +ush to bet*een 1<" and 18;H
@e can antici+ate a third$ or 5"H o( the time$ @ave 5 +ushes to a++ro%imatel& the
18; to !<! range
@e can antici+ate ?H o( @ave 5.s *ill e%tend be&ond !<! or higher Fibonacci
numbers
Again$ (or the non->lliott @ave trader$ # suggest that such statistics should not +resent an&
challenges
For me$ it.s sim+le # have a Fibo tool that lets me in+ut settings (values)! # +lace that tool on a
trend move (swing<high to swing<low !!! or !!! swing<low to swing<high) and +ro'ect-out (and
expand<out) a number o( (uture$ +otential su++ort and resistance lines
Fo&) Fibo0s
A For, Fibo is something # stumbled u+on bac, in !""8 # *as seeing more and more +rice
+rediction-abilit& *ith m& advanced uses o( Andre*s Pitch(or,s (also, generically called
#median sets*)! # cover +itch(or,s e%tensivel& in another cha+ter$ so # *on.t get into too much
detail here #( &ou alread& understand and are a++l&ing +itch(or,s to &our charts$ &ou *ill no-
doubt be intrigued *ith m& For, Fibo.s But as # mentioned earlier$ the realit& is$ m& For,
Fibo.s *or, is reall& a sub-set o( something else$ *hich # give credit to Scott /arne& (or
documenting a++ro%imatel& 1" &ears earlier (even though " was not aware of that fact) # also
reall& don.t ,no* i( /arne& is the one *ho de(ined it$ but # have not seen it re(erenced
else*here be(ore /arne& de(ines it @e.ll tal, about /arne&.s *or, here in a moment$ but (or
no*$ let.s continue *ith For, Fibo.s
#( &ou are not &et utiliMing the +o*er o( +itch(or,s on &our charts$ &et &ou believe Fibonacci
rules the charts$ &ou ma& *ant to reconsider &our decision to not be *or,ing *ith +itch(or,s
#n quic, revie*$ a (traditional) +itch(or, utiliMes combinations o( s*ing-high.s and s*ing-lo*.s
to (orm the base o( the +itch(or, (the trend line for which we actually bisect and create the
median itself) But i( &ou loo, at charts hard$ and have done enough Fibonacci stud&$ &ou.ll
quic,l& realiMe that those s*ing-high.s and s*ing-lo*.s *hich determine the basis (or the
+itch(or,$ are indeed almost al*a&s a Fibonacci level retracement or +ro'ection (rom a
+revious *ave move Lou then realiMe that a median-set becomes ver& +o*er(ul because it.s
entire (oundation is Fibonacci-based 4es+ite m& &ears using them$ ever& time +rice ma,es a
big reach and +uts the bra,es on to-the-+i+ on a +itch(or, +arallel$ # am totall& amaMed
Sometimes$ it.s 'ust outright scar& But +i+s-in-the-ban,$ # don.t mind being scaredP
* O&er&ie+ of Fibonacci and ,lliott -a&e .elationshi's by Marc .inehart. %d&anced /,T Trading Strategies. "01(an1#$
So *e ,no* +itch(or,s alread& contain incredible amounts o( Fibonacci 43A (by the nature of
the discussion above)$ but there.s still even more +o*er in them via the For, Fibo
A For, Fibo uses the s*ing-high0s*ing-lo* combination that creates the trend and rather than
+ro'ecting in the direction o( the trend$ *e +ro'ect$ bac,*ards$ into the ne* trend de(ined b&
the +itch(or, #n m& (irst use o( these$ # called this a Ereverse-FibonacciF$ as # *ould use m&
Fibonacci +ro'ection tool on them$ but bac,*ards Toda&$ # call them For, Fibo.s and the& are
lethall& accurate at +ro'ecting e%hausting and reversal +oints
The above chart illustrates e%actl& ho* For, Fibo.s de(ine reversal +oints 3ote the red-circled
areas on the chart @e had a 18<:H For, Fibo$ then !""H For, Fibo$ +recisel& identi(& turn-
arounds Though not circled$ &ou can see the magenta 1!8!H For, Fibo creates a
retracement$ as *ell Ier&$ ver& +o*er(ul
The lines internal to the median-set are called Fibonels @e.ll discuss them later
-tended 4et&acements
# mentioned that # stumbled-u+on reverse-Fibonacci.s (now or+ ibo's) *ith m& median-set
*or, bac, in !""8 At that time$ # *as con(used *ith the discover& #t.s not covered an&*here
in the available median-set literature )ut could me, Koe 0verage trader, really have made
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor 1?
some sort of discovery regarding median<sets1 # mean$ there have been tens-o(-thousands o(
traders be(ore me$ in man& mar,ets $ow could this be1 # didn.t *aste too much time # *ent
straight to (what " considered to be) the +itch(or, guru o( our da&$ *ith more than 5; &ears o(
trading e%+erience$ Timoth& =orge
;
# sent =orge several o( m& +itch(or,s *ith Ereverse
Fibonacci.sF dra*n$ and as,ed *hat he thought # believed this to be a (air question$ as # had
not seen it mentioned in his training materials on +itch(or,s )is re+l&$ in +art J #" thin+ you
have identified a verifiable and useful tool and measurement methodology* Those *ords told
me *e *ere doing something cutting-edge )e continued$ #!!! " would say you'd be hard
pressed to find anyone out there using it or even having seen it! "t was great insight on your
part to notice it, define it, and refine it in your own trading!*
#.ve continued the +ast several &ears to see i( an&one else has done an&thing li,e this and
have (ound nothing O( course$ *ho ,no*s *hat trul& lies in the de+ths o( #nternet
#n most recent times$ # have loo,ed at others *ho have done e%tensive studies o( +itch(or,s
and median-sets and are +ublishing their (indings (such as :reg isher
L
)$ but still$ no
re(erence to this reverse-Fibonacci realit&
#n a t*ist that can onl& be termed ELa* o( AttractionF$ or even Ebutter(l& e((ectF$ a trader *ho
*as considering trading m& )armonic @ave /onvergence
T=
sent me in(ormation about
/arne&.s )armonic /hart Patterns # guess EharmonicF being in both names$ he thought #
might *ant to see this stu(( # had seen re(erences to chart +atterns be(ore and it 'ust *asn.t
m& gig But$ this time$ *ith this re(erral$ # too, a closer loo, And # am so glad # did
@hat # sa* in /arne&.s *or, brought big smiles$ as it com+letel& validated *hat # *as doing
*ith For, Fibo.s in median-sets >ven though /arne& does not use +itch(or,s *ith his
harmonic chart +atterns$ his observations that de(ined chart +atterns shares a common
element *ith For, Fibo.s
@hen *e discussed retracements$ *e tal,ed about the e%+ectation o( +rice +ulling-bac, and
then bouncing o(( a Fibonacci level and then continuing in the direction o( the trend @e could
measure those +ull-bac,s *ith our retracements @hen *e discussed +ro'ections$ *e tal,ed
about a trend move +otentiall& continuing and our loo,ing (or (uture$ +otential targets based
on that trend move @ell$ *hat ha++ens *hen +rice retraces J 5?H$ <!H$ and continuesG
@hat ha++ens *hen +rice retraces be&ond the origin o( the original trendG #n essence$ a
1""H retracement brings us bac, to the origin o( the original move
T&+icall&$ once +ast 1""H$ *e then start using that move as the ne* trend direction$ and base
+ro'ections in the direction o( the trend @hat /arne& sho*ed me$ and # thin, ver& (e* others
have +ic,ed-u+ on$ is that +rice can retrace +ast 1""H J A34 be ver& +redictable at sho*ing
(uture su++ort and resistance b& merel& continuing that retrace *ith Fibonacci values greater
than 1""H #n /arne&.s *or,$ he terms this a E+ro'ectionF Obviousl&$ # am not (ond o( calling it
that$ because to me$ a +ro'ection goes in the direction o( the trend$ and here *e are merel&
loo,ing at retracements So$ (or me$ it ma,es more sense to thin, o( this as an Ee%tended
retracementF (#extended* because it goes past 6==/)! Nim Kane also discusses these
retracements *hich +rogress be&ond 1""H$ and admits he +re(ers calling them Ee%+ansionsF
2 Trading -ith Median ines 3 Ma''ing the Markets by Timothy Morge ! 4444 htt':55+++.Medianine.com
6 Finding High 7robability ines by /reg Fisher. +++.Median1ine1Study.com Median ine Study ! "##8
(as in #expanded* retracement), but because o( that name used else*here and not *anting to
con(use traders$ he re(erences them as Ee%ternalF retracements # +ersonall& thin, Ee%tended
retracementF describes the situation e%actl& as it is$ so # #i,e m& name (or them the best (not
biased one bit, either!!! lol)!
Let.s use one o( /arne&.s de(ined (with ibonacci levels) chart +atterns to illustrate some ,e&
+oints J in this case$ a Bullish Gartle& 3ote that this is a bullish +attern$ because at Point 4
+rice is e%+ected to reverse 3ote that Point 4 is de(ined$ in this case$ b& t*o di((erent +ull-
bac,s First$ the bigger +ull-bac, (rom QA to 4 as a 8?<H retracement J and secondl&$ 4 is
the 1!8!H 0 1<1?H +ull-bac, (#extended retracement*) o( the B/ move
source7 )armonicTradercom
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor !"
3o*$ loo, at the same +attern$ (irst *ith me adding a (e* elements to /arne&.s diagram and
+lacing our (ocus on the e%tended retrace$ then b& overla&ing a traditional +itch(or, *ith a
For, Fibo on to+ o( the Gartle& +attern
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor !1
@hat hit me *as that *hat # *as doing *ith For, Fibo.s J doing those Fibonacci.s in reverse
J *as e%actl& the same thing /arne& had been doing (or a decade *ith harmonic chart
+atterns #n m& e&es$ this brought com+lete validation to the conce+t o( the reverse-Fibonacci
And$ in realit&$ demonstrates the absolutel& incredible d&namics o( Fibonacci$ b& illustrating
ho* a com+letel& di((erent technolog& (an 0ndrews Pitchfor+) can validate *hat /arne& had
been doing (or so long *ith harmonic chart +atterns
@hile # +ersonall& *ill continue to ma,e a stud& o( harmonic chart +atterns$ # *ill never be as
com+rehensive as /arne& or one o( his devoted (ollo*ers As *ith >lliott @ave$ the value #
see in /arne&.s contribution to the mar,et (strictly from my personal trading perspective), is
that *e have more Fibonacci-based values that are +roven trend e%haustion +oints and that
an e%tended retracement is as +recisel& accurate as a standard (less than 6==/)
retracement
# don.t have to do a 1"-&ear stud& (or For, Fibo.s$ validating the realit& o( their +ro'ections and
accurac&$ as /arne& has essentiall& done that *ith his harmonic chart +attern e((orts And
Kane *ith his e%+anded retracements$ did the same Than+s 5cott and KimI
For me$ the value o( the e%tended retracement (or or+ ibo) is that the& give me the direction
and values o( (uture$ +otential su++ort and resistance And as +reviousl& discussed$ this
becomes even more +o*er(ul *hen combined *ith other e%isting su++ort and resistance$ and
# get multi+le +rice +oints in the same$ small Mone$ creating )igh Probabilit& Beversals C)PBD
For the users o( >lliott @ave or )armonic /hart Patterns$ 'ust understand that *hen &ou
combine those technologies *ith )armonic @ave /onvergence
T=
$ &ou have reversals
narro*ed to *ithin 5-+i+ to ;-+i+ Mones This allows me to put my ris into substantially
mu!h"smaller stop"losses than my peer traders, whi!h translates into me maing #x,
5x, e$en %&x the profit they do, pip"for"pip, in the same trades' That last sentence is the
com+lete reason # *anted to move (rom the e%isting (old)$ (ailed +aradigm and move to the
ne*$ more +ro(itable +aradigm
Fibone*s
Fibonels are a name that sho*ed u+ one da& in m& labeling o( a +itch(or, on a chart #.ve
been using them (or so long$ # don.t recall ho* # came u+ *ith the name$ or ma&be # dreamed
it$ or ma&be # read it some*here # trul& don.t recall But a(ter some strong searching$ # have
not seen them re(erenced an&*here else So at this +oint$ #.ll continue to use EFibonelF to
describe a boundar& (or a Fibonacci-based +rice channel in or outside a median-set$
containing the same slo+e as the median-set
For those that use trend lines$ it.s understood that +rice has to reach a high or lo* be(ore that
+oint can later be considered as a +ivot (or the trend line #t.s onl& u+on the second
occurrence o( a touch to that trend line that the trend line can be use(ul in trading
The +o*er o( median sets is the& are dra*n in-advance o( +rice reaching that (irst high-or-lo*
(once the pitchfor+ has been drawn) *hich the trend line chartist *ould consider as a +ivot #n
other *ords$ the trend line chartist misses o++ortunities because the trend line requires that
(irst +oint (or the second +oint to be a valid +ivot The +itch(or, chartist has the median set
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor !!
dra*n alread&$ so the (irst time +rice reaches a boundar& (the median itself, or upper or lower
parallel)$ the trader has a solid +otential +ivot in +lace
@hat ma,es Fibonels e%tremel& +o*er(ul$ is the& carr& that same$ E+redictiveF attribute The&
sit there$ sort o( li,e a +rice tra+$ 'ust *aiting (or +rice to reach them and e%haust$ bounce$
reverse$ etc
For &ears$ # have dra*n Fibonels manuall& To do so$ &ou merel& dra* a Fibonacci
retracement in the u++er or lo*er channel o( the +itch(or,$ on a vertical +oint$ such as a da&
mar,er Then du+licate lines (parallel to the median or upper or lower boundary lines)$ and
+lace them at the intersection o( the various Fibonacci levels This is tedious *or,$ but as &ou
can see *ith the above (igure$ +rovides bounti(ul results in terms o( su++ort and resistance
inside the median set The challenge *ith manuall&-dra*n lines is the& don.t +ivot *hen the
median-set.s angle is changed (such as in a #best fit* median set) O( course$ then there.s the
issue o( screen-clutter$ Fibonels e%ternal to the median sets$ and testing various levels o(
Fibonacci values
#n earl& !"1"$ # designed a s+eci(ication (or Eauto-FibonelsF in the Pi+/lub Pro/harts To m&
,no*ledge$ this is the (irst +lace that allo*s the diversit& in a++l&ing Fibonacci-based +rice
channels to the e%tent that # do =uch than,s to the good (ol,s at FQ Tre, (or ta,ing that
s+eci(ication and im+lementing it in the +itch(or, tool o( Pi+/lub Pro/harts @ith this
+articular im+lementation o( Fibonels$ # have u+ to si%$ di((erent settings - each *ith u+ to 1!
values0levels that # can change (and save) and call on-the-(l& an& time # *ant$ *ith an& o(
them all moving in-s&nc *ith the +itch(or, as # move it around
6nderstand$ man& charting +lat(orms do not even allo* an&thing other than a traditional
median set To dra* a Schi(($ or modi(ied-Schi(($ or even a best-(it median-set is im+ossible on
man& charts 3ot onl& can the Pro/harts # use dra* all the +ossibilities (or median-sets$ the&
have the Fibonels attached and move in *hatever direction # move the median-set The +i+s
one can ma,e b& using median-sets combined *ith Fibonels cannot be described adequatel&
in a cha+ter li,e this # *ill 'ust state that m& +ersonal trading *ent through a star-gate o(
sorts$ and into not 'ust the ne%t level$ but a level magnitudes signi(icantl& above *here # *as$
once # started using median-sets and Fibonels # cannot +lace enough em+hasis on using
median-sets *ith Fibonels (or an& trader *ho is attem+ting to be serious *ith their e((orts
And +itch(or, +urists +lease understand$ Fibonels are +er(ectl& de(ined b& Ande*s$ the& are
merel& sliders dra*n in advance$ and based 1""H on Fibonacci relationshi+s
#n summar&$ # have a tool *hich is 1""H Fibonacci-based to begin *ith (0ndrews Pitchfor+
having the basis being a 5(<5$ or 5$<5( combination, for which the 5$ and 5( are
ibonacci retracements themselves)! Then$ *e a++l& another level o( Fibonacci to create
Fibonels in the median set #( &ou believe Eall things ibonacciF$ Fibonels *ill surel& deliver
Sam+le Fibonel Settings Panel in Pi+/lub Pro/harts C*hite-label FQ Tre, #ntelli/hartsD
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor !:
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor !;
Static "ha&t Su((o&t 5and 4esistance6
A(ter m& roo,ie &ear in trading$ # ran across a trader 0 Fore% trainer *ho introduced me to the
conce+t o( a Fibonacci-derived grid residing on the charts This EgridF *as static That is$ it did
not (luctuate *ith +rice movement This grid *as al*a&s at the same +rice +oints on the
charts$ and al*a&s *ill be on the charts at those same +rice +oints The trader *ho derived
this Fibonacci-based grid is Tim /ameron # (irst ran into Tim in the +rehistoric FQ Trainer
da&s$ *here he *as trading longer term +eriods and *as using standardiMed S&B on 5-hour
and dail& charts # loved the conce+t o( Tim.s EFibo GridF$ but more so$ li,ed the amount o( hits
it +roduced (Mote@ ibo :rid discussed here is not the same as the ibonacci :rid from
Trader$ouse-emo!com) #t 'ust hit me hard that there *ere +ermanent +rice +oints on the
charts (that did not move with price, of waves, and was not impacted by the siDe of the
trends) and that the& *ould al*a&s be at the same +rices /all that m& o*n BAS$ call that me
living in an old and (ailing +aradigm$ *hatever Tim.s Fibo Grid conce+t uses t*o grids$ a
1"""-+i+ grid and a ;""-+i+ grid$ in order to accommodate intra-da& to +osition trading )e
divides them u+ creating static chart su++ort and resistance using a s+eci(ic Fibonacci-based
a++roach
8
#.ve onl& seen one other stud&0a++lication o( Fibonacci li,e the Fibo Grid$ *herein there is a
Fibonacci-based grid on the charts This one *as derived b& Le*is >vans
?
and uses an
EAbsolute FibonacciF as the static Fibonacci S&B
Fibonacci "*uste&s. 7igh 'e&centage 4eve&sa*s 57'46. and ne&gy 'oints
A EFibonacci clusterF is a name given to several +rice +oints *hich *ere derived via
retracements$ +ro'ections (extensions, expansions)$ e%tended retracements$ For, Fibo.s
(below)$ etc$ and *hich are done on various Cread #different*D *aves be(ore and around the
current +rice$ all sho*ing (uture +otential S&B$ and all o( *hich +rovide some areas o( over-
la++ing +rice +oints (typically in a fairly tight, =<pip to J<pip Done)!
Thus$ *e might have a larger$ :-hour retracement sho*ing a 5?!H retracement and a
smaller$ 5"-minute *ave +ro'ection$ *hose 1<1?H +ro'ection lands on to+ o($ or *ithin a (e*
+i+s o($ each other @e have this hot-s+ot$ *here t*o di((erent Fibonacci anal&ses have +oints
at the same s+ot Get another Fibonacci-based stud& to land on or near that same s+ot$ and
&ou have a +rett& good EclusterF o( Fibonacci-based +rice +oints that t&+icall& *ill translate
into something o( signi(icance
#n terms o( m& trading$ # use a combination o( e%isting su++ort and resistance com+onents
(Pivots, ibo<Pivots, &amarilla (ines, 5tatic ibo price points, 0ndrews Pitchfor+s, etc!) and
get e%cited *hen # see these S&B +oints overla+ m& Fibonacci retracements 0 +ro'ections 0
e%+ansions @hen these$ or various Fibonacci studies$ land on to+ o( each other$ # re(er to
them as )igh-Probabilit& Beversal C)PBD Mones #n essence then$ b& de(inition$ a Fibonacci
/luster is a subset o( m& )PB.s (as an $P4 can contain multiple ibonacci points, or other
0 The Fibo /rid +as created from intense study of socio beha&ior. 9t and other Fibonacci trading techni:ues can be learned
in de'th by contacting Tim Cameron at timcameron61@gmail.com
; eft <rain Trading by e+is ,&ans and Olga Sheean. 9nside Out Media. ! "##2 http://www.leftbraintrading.com
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor !<
5N4 components, or one ibonacci point and other 5N4, and so on)!
#n terms o( +itch(or,s and their +otential (or su++ort and resistance$ there is one unique
attribute *hich is un+aralleled *hen com+ared to most other standard su++ort and resistance
And this is the (act that the& are not horiMontal +rice +oints B& being diagonal$ the& create a
unique circumstance in regards to timing #( &ou consider a traditional median-set$ there is an
u++er +arallel$ median$ and lo*er +arallel @hen those lines intersect an& other su++ort and
resistance lines (including any ibonacci<based study), &ou have something ver& +o*er(ul
/onsider the (act that +itch(or,s are Fibonacci-loaded (as their foundation points, those
swing<high and swing<low points, are all ibonacci<derived to begin with) J *ell$ *hen &ou
then overla& a Fibonacci-based stud& (retracement, pro?ection, etc!) on to+ o( a median set
and have a +oint o( intersection$ that creates an )PB *ith some strong Fibonacci-energ&
A comment # reall& should have added bac, *hen tal,ing about /arne& and harmonic chart
+atterns con(irming For,-Fibo.s J the (act that *e can overla& a +itch(or, on most harmonic
+atterns and have a For,-Fibo be the same as one o( /arne&.s e%tended retracements does
not mean that is the onl& +lace For,-Fibo.s are valid @e merel& have /arne&.s *or, to
validate the e%tended retracement and to establish some o( those unique e%tended retrace
values #n /arne&.s use o( harmonic chart +atterns$ he has s+eci(ic e%tended retracements (or
di((erent harmonic chart +atterns as +otential reversal Mones @ith For,-Fibo.s$ *hat *e are
sa&ing is that an&*here &ou have a +itch(or,$ not 'ust on to+ o( a harmonic chart +attern$ but
anywhere you have that 5$<5(<5$ or 5(<5$<5( combination and a valid pitchfor+ can be
drawn$ &ou have the o++ortunit& to have an& number o( termination +oints via that For,-Fibo
So *hether it.s a For,-Fibo and a com+onent o( the median-set$ or a For,-Fibo and another
t&+e o( Fibonacci relationshi+ (retracement, pro?ection, expansion, extended retrace), an
energ& +oint (or a )PB is created *hen the t*o intersect
#n terms o( Andre*s-s+ea, (pitchfor+ purists)$ *e consider an intersection o( a +itch(or,
com+onent (parallel or median) o( t*o$ di((erent median-sets to be an Eenerg&-+ointF For me$
# can e%+and that de(inition o( an energ&-+oint to include a median-set *hich has an&
com+onent intersecting not 'ust another median-set com+onent$ but also an& Fibonacci-based
stud& or +ro'ected value
@e have added to that abilit& b& having Fibonels inside (and outside) our median-sets J
meaning # can have a Fibonacci-stud& having +ro'ected values *hich land on Fibonels (not
?ust the upper and lower parallels and the median itself) creating an energ& +oint So there
are more )PB.s *ith energ& that are thus de(ined *hen having +itch(or,s *ith Fibonels
dra*n
@hile these higher-+robabilit& C)PBsD *ave e%haustion +oints do not guarantee a turn-
around$ the& have much higher +robabilities o( doing so than *hen the& are 'ust hanging out
b& themselves But again$ (or m& +ersonal trading$ # com+liment these high-+robabilit&
reversal Mones *ith m& use o( )armonic @ave /onvergence
T=
$ using ne* technolog& to
determine trend e%haustion @hen )armonic @ave /onvergence
T=
sho*s *ave termination
at the +recise time +rice engages one o( m& )PB.s$ # have a great trade set-u+
The above chart *as +ulled (rom Fore%Pitch(or,com #t illustrates a great trade entr& (mar+ed
as the red<circled O6)! This entr& *as a )PB com+rised o( the +itch(or, median (center green
line) A34 the 1:1:H For,-Fibo (extended retracement) (rom that +itch(or, meeting at the
same +rice +oint
Fibonacci '&ecision 8sing 7a&monic /ave "onve&gence
T,
A challenge (or most e%isting +aradigm traders is that their indicators do not o((er the
+recision to utiliMe more than a hand(ul o( Fibonacci levels (or retracements and +ro'ections
#t.s hard to include +recision regarding a bounce *hen most o( the tools are lagging in their
inter+retation o( the data
)o*ever$ as more traders transition to the ne* +aradigm o( trading$ there *ill be more and
more tools available to measure$ in real-time$ much more +recisel& than traders le(t in the
e%isting (old)$ (ailed +aradigm Thus$ the ne* +aradigm traders *ill be able to utiliMe more
robust settings in their Fibonacci tools *hen trading (and may also reBuire some chart
vendors to increase the number of allowable ibonacci values G levels in their settings)
)o*ever$ to illustrate the combined use o( Fibonacci and )armonic @ave /onvergence
T=
$
let.s ta,e a +ea, at the +revious chart again This chart also includes a vie* o( the real-time
(and multi<time period) =ulti@ave
T=
indicator$ sho*ing )armonic @ave /onvergence
T=
(purple wave brea+ing blue wave at yellow line) at the +recise time +rice e%hausting at the
)PB /onvergence ta,es +lace *hen the last o( a lo*er-level *ave in its sequence (in Alliott
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor !?
%ave spea+, an example would be the 9 to 3 wave of a 3 wave move) terminates at the same
time an u++er level *ave terminates (such as the ; to J wave of the next wave level up)
Again$ &ou don.t need an understanding o( >lliott @ave to understand convergence or to read
=ulti@ave
T=
$ because it is a visual indicator #n the above e%am+le$ the lo*er level (purple
wave) goes to e%treme (yellow line) at the same time the u++er level (blue wave) goes to the
same e%treme @e thus have a convergence o( those t*o di((erent *aves at the same
moment @hen that occurs at a )PB$ there is a +o*er(ul entr& This is >QA/TLL ho* # ma,e
most o( m& trade entries
9et F&ee 84:8S1 'itchFo&) Set;8(s
=& Fore% training +artner and # have a *ebsite that is a great resource (or the trader *ho
recogniMes the value o( trading using the EFibonacci loadedF +itch(or,s Both Br&an EPi+SlamF
>d*ards and # +ost +itch(or,s *ith detail at htt+700***Fore%Pitch(or,com There is no
charge to use this site or the +itch(or,s #( &ou *ant to have real-time noti(ication o( the charts
being +osted$ 'ust (ollo* us at t*ittercom0stevegregor and t*ittercom0br&an+i+slam @e +ost
+itch(or,s that *ill hel+ both the beginner and advanced +itch(or, trader
The <4o**ing= Fibonacci. ,a&)et Tu&nove&. and Shadow Bands
=ost traders use moving averages to trac, historical +rice movement and to +ro'ect (via a
cross with another moving average) the +oint at *hich the& ma& consider a change in
direction o( +rice movement 6n(ortunatel&$ most traders have are not educated on
understanding multi+le time (rames and their interde+endence u+on each other
#n m& earl& trading da&s$ # s+ent considerable time +lotting ALL moving averages (seriously,
pic+ a moving average, " researched it) in res+ect to ho* the& modeled +rice @hat #
discovered a(ter loo,ing at (our currenc& +airs$ in over !$""" trend moves$ over a !-&ear
+eriod$ *as that the <!>=A *as T)> turn-over +oint on a 5"-minute chart B& turn-over$ #
mean the +oint *herein the Bu&ers and Sellers do their battle and a *inner is +ronounced
This is the same battle *hich occurs at +revailing Fibonacci levels (the standard J7!;/, 3=/,
and L6!7/) *herein *e either bounce and resume the original trend$ or have a trend reversal
@hat # observed *as that the <!>=A *as at that +oint nearl& ever& time J almost seemingl&
having it.s o*n A# (artificial intelligence) as to determining *hether that turn-over *ould be at
51?H$ ;"H$ or <1?H @hen # sa& the <!>=A is that turnover$ # mean b& =AG3#T64>S
com+ared to other moving averages Again$ # tested them all$ *ithout bias The ()*+, was
the defa!to !hampion by magnitudes'
As time and the &ears *ent on$ # also observed that the <!>=A *as not 'ust the turn-over on
the 5"-minute chart$ but on all time-+eriods (easily observable from 6<minute up to 7<hour)!
Lou ma& note that Bob Boo,er
9
+ublished a +a+er man& &ears ago$ *ith his (irst use o( the
<!>=A in his trading$ as *ell (the original 3<6J<L; strategy) There.s a reason that <! is so
ver& +o*er(ul # challenge &ou to +ut that <!>=A on various time (rames$ and let it run (or a
*ee, Lou.ll be incredibl& amaMed (especially if you then draw fibo's on the visible trends)!
8 .ob<ooker.com or 7i'to'ia.com.
3o* *ithout getting too much into =ath-? here$ # *ill state that # ,no* some *ell-,no*n
celebrit& traders use the 5:>=A (in a tunnel of $igh<(ow) as the mar,et turn-over The realit&
is$ this is 'ust using the <!>=A (rom a lo*er time +eriod
#( # *ant to see the <!>=A (rom a 5"-minute chart on a 1-hour chart$ # merel& +lot it as a
51>=A on that hourl& chart (there are P as many hourly candles as there are J=<minute
candles in the same amount of time being reviewed, so we can use a J6A>0 on the hourly to
plot the exact same priceGtime points we would see with a L;A>0 on a J=<minute chart)
So here.s the test Plot a 5:>=A on a chart$ then +lot a 51>=A Lou *ill t&+icall& see man&
more touches to that 51>=A than &ou *ill the 5:>=A$ and &es$ the& are quite close to each
other most o( the time - being 'ust 5-+oints a*a& (rom each other And &es$ the 5:>=A *ill
have some touches$ but 'ust loo, at the touches to the 51>=A So m& conclusion the
5:>=A is close enough to the 51>=A that its use *ill +rovide ver& similar results And the
reason that it *or,s is *e are reall& loo,ing at a <!>=A (rom the ne%t S lo*er time +eriod
(meaning 63<min when loo+ing at J=<min, or J=<min when loo+ing at 6<hour chart, etc)! Thus$
the 5:>=A as mar,et turn-over is reall& the same as the <!>=A as mar,et turnover # am not
tr&ing to bring con(usion here (so if you are, ?ust move on), but illustrating that the +roverbial
ele+hant can be seen (rom man& di((erent +ers+ectives J and that the 5:>=A tunnel is in
realit& 'ust missing the boat b& a (e* (non<distinguishable) +i+s here and there$ and that it is
reall& mimic,ing the realit& o( the <!>=A as the turn-over on all time +eriods
Bottom line here and the real signi(icance o( the <!>=A J it does act as that Erolling
FibonacciF$ giving the trader good indication as to *hich Fibonacci levels ma& indeed be T)>
level to +a& close attention to as &ou do &our trade set-u+s
#( &ou too, m& advice$ and +lotted some <!>=A.s$ there *ill be no question the <!>=A
determines the mar,et turn-over 3o*$ having seen this (or quite some time$ # realiMed that i( it
*as the true turn-over +oint$ it must also be the middle-o(-the-road$ so to s+ea,$ (or +rice
movement #( it *as going to be the middle o( the road$ then # *as *illing to bet that +rice
*ould move in Fibonacci relationshi+s in accordance *ith that middle o( the road And indeed
it does
#n one o( the classes # teach$ # demonstrate this *ith Shado* Bands Shado* Bands are
Fibonacci-based Eshado*sF o( the <!>=A based on the Fibonacci sequence The& are not
Bollinger Bands$ or Standard 4eviation Bands$ or =oving Average >nvelo+es$ or Boo,er
Bands$ or an&thing else &ou have +robabl& seen The& are sim+l& Fibonacci sequenced
bands relative to the <!>=A )ut, %O%, do they ever define price movement!
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor 5"
Loo, at the chart belo* and see i( &ou can see an& +rice +atterns that might dictate +rice
movement Sta& on that chart (or a (e* moments
%hat do you see1 0re there any price patterns that truly define price1 -oes price seem to be
honoring (from left of chart to right of chart) any particular support and resistance1
3o* loo, at the chart above$ sho*ing the same +rice movement as the +revious chart (a little
crunched because of lines, but exact same chart and time frame)$ but no* *ith Shado*
Bands on the turn-over C<!>=AD Lou *ill note +rice sta&s in the channels de(ined b& the
boundaries o( those bands
Finall&$ on the (ollo*ing +age$ there is the same chart EMoomed-inF to bring more clarit& @hen
# (irst sa* this$ # had chills u+ m& s+ine 3earl& < &ears later$ # still do Price is not random or
arbitrar& at all Fibonacci realities control +rice movement *ithout question Obviousl&$ a
trader *itnessing such incredible su++ort & resistance can a++l& this to their trading in man&
di((erent *a&s
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor 5!
"and*e /ic) o& "and*e "*ose>
@hen # *as (irst taught to use m& Fibonacci retracement tool$ # *as al*a&s instructed to go
(rom absolute high to absolute lo* (or low to high) in a trend move$ in order to sho* the
retracement levels T&+icall&$ that meant *ic,-to-*ic,
Over the &ears$ # have learned that some moves are better de(ined b& using the candle close$
versus the candle high or lo* *ic,
The easiest *a& to validate leaving the Fibo tool on the *ic,s versus moving one or the other
end to the closed candle +rice$ is *hat # call Ecom+lianceF Once # +ut on a Fibo retracement$ #
loo, at the move a(ter the run$ and be(ore the run$ and see i( an& o( the to+s or bottoms inside
the trend # am measuring rest on Fibonacci retracement levels Lou.d be sur+rised sometimes
*hat moving the Fibo tool end-+oint to a closed candle can do All o( a sudden ever&thing
matches u+ +recisel& # t&+icall& onl& loo, at moving (rom *ic, to closed candle *hen CaD
there is a *ic, o( more than a +i+ or t*o.. and CbD i( there is no com+liance *ith +rice and the
retracement values *hen the Fibo tool is using the *ic, This is one o( those things # don.t
question
The di((erence in *ic, vs closed candle might be data (eed$ chart inter+retation o( the data
(eed$ etc " don't really care # ,no* i( +rice is going to EhonorF the Fibonacci retracement
values (have highs and lows touch on various retracement prices with the ibo tool at that
location)$ # have a good +lacement o( m& Fibo tool #( # don.t see +rice honoring those
retracements$ # *ill move the Fibo tool to the closed candle and observe #( the subsequent
+rices honor the Fibonacci retracement levels no*$ # ,ee+ the Fibo tool on the closed candle
# don.t as,$ #%hy the wic+ sometimes and why the closed candle other times1* # 'ust loo, (or
com+liance and ban, the +i+s based on that sim+le (act
/hat is the 1ea* with the 50% ?a*ue>
The Fibonacci ;"H value is not reall& a Fibonacci level +er Fibonacci$ but rather via trading
convention @hen +rice leaves the 5?!H level and is headed to the <1?H level$ as *ith
most S&B s&stems$ the mid-+oint has its +o*er #t.s *here +rice decides to continue the
'ourne& or to turn around to the +revious values So the realit& o( the ;"H level is that it is
reall& 'ust the mid-+oint o( such a move in correction$ but that does give it the bounce
continue0reverse attribute that the other Fibonacci levels have$ as *ell
)o*ever$ that ;"H is so +o*er(ul in that regard$ &ou *ill see some (ol,s 'ust sim+li(& their
Fibonacci levels to !;H Cversus ;J!L/)$ ;"H$ and 8;H (instead of 8L!9/) because the !;
and 8; levels are reall& 'ust mid-+oints themselves
And i( &ou thin, that is slo++& and not +recise$ tr& this *hen &ou have some s+are time Go
grab a >6B06S4 1"-&ear 4ail& /hart Go (rom the bottom (October ;L, ;===) to the highest
+oint (at the time of this paper) o( Nul& 1;$ !""? and do a retracement
The +rocess (rom here on out$ *ill be to use the )ALF o( the ;"H retracement *hich contains
the current +rice #n other *ords$ in that 1"-&ear retracement$ dra* a 3>@ retracement$ using
the same high$ but (or the bottom use the ;"H +rice (rom the (irst$ large 1"-&ear retracement
4on.t *orr& about @)>B> that original ;"H retracement landed (wic+, close, or in the middle
of a candle)! Nust use the ;"H level (but to the pip) as the bottom point for the retracement!
That *ill result in another Fibonacci retracement$ (or *hich &ou *ill continue to 'ust choose
the ;"H (or *hich current +rice resides 4o this several times$ and &ou end u+ *ith the
current +rice channel 3o* do a to+ to ;"H bottom (or bottom to top) Fibonacci retracement
on the that channel$ and &ou *ill see s*ing-high.s and s*ing-lo*.s and all the standard
Fibonacci retracement levels Sim+l& magic in man& *a&s Les$ +roving (while some will
argue 3=/ is not a true ibonacci level) that ;"H carries some +o*er(ul insight into trend
movement Thus those using those sim+li(ied !;-;"-8; values are not as #out there* as some
ma& +erceiveP
S(ecia* **iott /ave '&o$ection Technique
@hile students o( >lliott @ave learn various +ro'ection0e%+ansion techniques and
values0levels (or +ro'ecting *aves$ there e%ists a little ,no*n technique (or +ro'ection *hich
utiliMes an interesting a++lication o( the Fibo Tool and some understanding o( absolute lengths
and relative length relationshi+s
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor 5:
# have used the Fibo tool li,e this +reviousl& in consolidation +eriods (non Alliott %ave), but
this is a great ti+ (or those elliotticians<in<the<ma+ing *ho *ant something e%tra #nstead o(
measuring a *ave at 1""H and then +ro'ecting$ *e are going *ith the +remise that *e ,no*
the *ave is some +ercentage o( the total$ but *e don.t ,no* the total -oes that ma+e any
sense1 As an e%am+le$ i( *e ,no* that @ave 1 is <1?H o( a total ;-*ave move$ *e can then
'ust +ut our Fibo tool on the bottom o( the *ave and stretch it out to *here <1?H is at the ti+
o( the *ave 1 @e then have a +ro'ection (originally un+nown) (or the to+ o( @ave ; b& *here-
ever our Fibo Tool to+ no* resides
Let.s consider the ;-*ave im+ulsive move (irst (left) Per >lliott @ave guidelines$ there are
several +ossibilities (or a @ave ; But this is a ver& sim+le a++roach (or the entire ;-*ave
structure @e can use this method once @ave 1 starts to +ull-bac, #( *e measure @ave 1
(rom it.s end and +ro'ect out another 1<1?H$ *e end u+ *ith a Et&+icalF @ave ; So to
reverse engineer this use o( Fibonacci$ *hen *e then loo, at the total +ro'ected move$ *e can
see that @ave 1 is <1?H o( o( the entire move C+ro'ect out 1<1?H and then use that as the
to+ o( the @ave ; #( *e then measure (rom Q to @ave ;$ *e see that @ave 1 is <1?H0
@e ,no* @ave 1 is <1?H o( the total +ull bac, as *e stretch the Fibo tool$ *e then ,no*
that the absolute length o( 1 *ave (relative to wave 3) is 5?!H (simple math, if the ibo rests
on L6!7/ for %ave 6, then it's length is 6==!=/ < L6!7/ or J7!;/) @e then ,no* that *ave
! +ulls bac, <1?H o( @ave 1 (or !L6!7/ of J7!;/ Q ;J!L/)! Thus$ to measure the end o( !
relative to the (ull length to @ave ;$ *e have to add !5<H more be&ond *ave 1 at <1?H and
end u+ at ?;:H (L6!; R ;J!L Q 73!9) That math is reall& quite sim+le
On the corrective side (right)$ *e have to ma,e some EstandardF assum+tions again
Assuming A *ill equal /$ *e can then +ro'ect0e%+and 1""H (rom the +ull-bac, in B () pulling
bac+ L6!7/ of 0) and end u+ *ith a +ro'ection (or / o(( the ti+ o( A at 15?!H (if ) pulls bac+
L6!7/ from 0, that means there is J7!;/ more to the origin of 0 J *hen *e add 1""H to
5?!$ *e end u+ *ith 15?!H (or the (ull length o( Q to /D To then measure either A or / as a
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor 5;
+ercentage o( the total move$ *e have 1"" 0 15?! T 8!: So (rom the ti+ o( the to+ at / at
15?! J 8!:H bac, *ould be B$ and (rom Q CbottomD u+ 8!: to A *ould be !8< do*n (rom
the to+ (6==!=/ of total move ' 8;!9/ of total move Q ;8!L/ of total move)!
4on.t *orr& i( &ou can.t trul& (ollo* the math (but wor+ on it, it's good to see the relationships
with percentages, absolute lengths, relative lengths, etc)! Nust ,no* &ou can stretch-out &our
Fibo Tool and use these +ercentages to +ro'ect Et&+icalF *ave termination +oints
#.ve seen these t&+es o( measurements (not defined as " have here) +assed in circles among
elliotticians$ but as &ou can see$ Fibonacci and math is sim+l& 'ust that @e can ma,e an&
number o( such EstretchF +ro'ection measurements using di((erent +ro'ected e%+ansions$
di((erent +ull-bac,s$ etc #n the end$ it.s all 'ust math But # thin, it.s great *hen one *or,s
through the math to see the relationshi+s behind such uses o( the Fibo tool
Fibonacci 7omewo&) Assignment
# *ould be remiss *ithout mentioning that as a Fibonacci trader &ou have a home*or,
assignment i( &ou are to be ta,en seriousl& $ave you ever wondered why a currency's price
can put on the bra+es, to<the<pip, say at a J7!;/ retracement1 "s it because all active traders
are playing that price, or is it something larger1 Lou decide$ but (irst$ be sure to *atch
E)istor&.s )idden >ngineF at htt+700***Socionomicscom #t.s a great do*nload and *ill o+en
&our e&es regarding Fibonacci
'utting %t A** Togethe& 2 T&ading /ith Fibonacci
#.ve covered man& sub'ects in this +a+er$ all based on Fibonacci The t&+ical old (failed)
+aradigm trader is still tr&ing to (ind the )ol& Grail The& loo, (or that one indicator or stud&
that *ill tell them @)>3 to get into a trade From a chartist +ers+ective$ (undamentals are
meaningless #( an&thing$ the& get in the *a& Bemember$ # don.t care @)L +rice moves$ #
onl& care that # ,no* *hen to see it ma,e that move
=astering Fibonacci and the techniques described herein *ill change the *a& the t&+ical
trader thin,s # have seen (orums *here there are arguments$ bac,ed *ith great (undamental
and technical anal&sis$ about *here the ne%t to+ *ill or *ill not be The reason (or much o(
that is that in the old (failed) +aradigm$ &ou *on.t ,no* *hen &ou are there 6sing techniques
as described in this +a+er$ &ou can (ind the current trend$ (ind the (irst *aves that created it$
and +ro'ect 0 e%+and Lou can (ind the last bigger move be(ore the reversal$ and do
retracements Lou might dra* a median-set and dra* a For, Fibo The bottom line$ &ou can
have a series J !$ 5$ ma&be more$ o( Fibonacci cluster )igh Probabilit& Beversal ($P4)
Mones on &our charts The& ma& be !; or 1"" +i+s a+art #t doesn.t matter @hen +rice gets to
that Mone$ &ou *ill see something ha++en
For me$ because # use )armonic @ave /onvergence
T=
$ # ,no* *hen there is a +ull-bac, at
that )PB Mone$ *hether it is a reversal$ or a retrace$ or about to ta,e o(( im+ulsivel& in the
original direction (or another ;" to 1;" +i+s @ithout a real<time tool to tell me$ # *ouldn.t ,no*
that # highl& encourage &our consideration (or moving to the ne* +aradigm$ *ith the +ro+er
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor 5<
tools$ (or success(ul trading The motivation (or learning the sound techniques +resented in
this +a+er trul& come do*n to a++lication #( &ou cannot a++l& *hat is here$ the motivation to
master them *ill surel& *ane 5o are you going to step<up to the new paradigm, where the
process of price movement is understood and measurable with real<time indicators, pointing
out what to do when price reaches the #price traps* you set ($P4s), or are you going to
remain stuc+ in the old (23/ failure) paradigm, hoping someday that road will ta+e you
somewhere1 Trust me$ that.s a dead-end road #( &ou are serious about &our trading$ &ou
need to ta,e it to the ne%t level
)armonic @ave /onvergence
T=
is the basis (or the ne* +aradigm But )@/ alone is not
enough$ &ou have to have an indicator that measures it # use =ulti@ave
T=
to see the
convergences and the trend e%haustion +oints The +o*er in =ulti@ave
T=
$ besides being real-
time$ is that it is the mar,et.s (irst true multi+le-time +eriod indicator This means # can +ut
=ulti@ave
T=
on m& ;-min chart$ and see the *aves +rogression and termination on a
com+arative basis (rom :-hour$ 1-hour$ 5"-min$ 1"-min$ ;-min$ and 1-min ALL at the same
time$ on one chart$ in real-time Mow that's trading power! That's a chart on steroids! And all
that translates into me being able to get into the same trades other traders do$ but *ith
e%tremel& tight sto+s And that means$ # can ma,e 5%$ ;%$ even 1"% the +ro(it the& ma,e$ in
the same trade$ +i+-(or-+i+ #( that isn.t enough to have &ou ta,e a serious loo, at )armonic
@ave /onvergence
T=
$ # don.t ,no* *hat else could
#.ve included a quic,-+ee, at )armonic @ave /onvergence
T=
C)@/D at the end o( this +a+er
)@/ is a +iece o( the ne* +aradigm$ the (oundation (or the (uture o( Fore% trading
Fibonacci Leve*s 2 The ?a*ues
This is *hat it comes do*n to using a good set o( Fibonacci levels 0 values # *ish this table
*as given to me *hen # (irst started trading These are the values to use in &our Fibo tool (or
retracements$ +ro'ections$ e%+ansions$ For, Fibo.s$ e%tended retracements$ and Fibonels
Advanced Fibonacci Techniques & Studies Leaving The Old Paradigm Behind Steve Gregor 5?
Summa&y
#t *as m& intention to sho* the t&+ical trader that there are man& uses (or Fibonacci levels in
their trading =ost traders onl& incor+orate a (e* o( the techniques # mention For sure$ ver&$
ver& (e* traders *ill have a com+iled list o( Fibonacci values 0 levels as +resented in this
+a+er There is one thing o( *hich # am absolutel& convinced J the more # use Fibonacci in
m& trading$ the less convinced # am that the mar,et has an& randomness to it And *hen a
trader ,no*s the mar,et is not random$ that +rovides an o++ortunit& (or gaining a sense o(
control 3o$ *e *on.t dictate *here and *hen +rice moves$ that.s not *hat # mean *hen # sa&
EcontrolF But *e can +redict +otential +laces it *ill sto+ along the *a& J and on the non-
technical side$ over time$ that +rovides a strong con(idence that hel+s the mental game more
than one can imagine
,bout -te$e .
# live in /ali(ornia (an east<coast transplant) and have (our children (; adult, ; teens) # love
the seashore$ mountains$ hi,ing$ and an&thing (or *hich the ,ids have an interest #.ve been
active in the technolog& arena most o( m& adult li(e #.ve earned a P/ =agaMine >ditor.s
/hoice A*ard$ an #3/;"" Fastest Gro*ing /om+an& A*ard$ A /om+aq 4istinguished 4ealer
A*ard$ and trul& en'o& technolog& (without being a gee+) and ho* it can im+act our lives #.ve
been trading the Fore% since !"":$ and have hel+ed coach (directly, or indirectly) thousands
o( traders in their +ursuit o( becoming success(ul currenc& traders # discovered )armonic
@ave /onvergence
T=
and created the real-time$ multi+le-time-+eriod =ulti@ave
T=
(amil& o(
indicators to measure )@/ #.ve innovated man& as+ects o( trading$ including the use o(
Fibonacci-based Fibonels /urrentl&$ # am /hie( Strategist and Founder o( Pi+/lubcom$
*here m& training +artner$ Br&an EPi+SlamF >d*ards$ and # hel+ move traders (rom the old$
(ailed trading +aradigm$ to the ne* trading +aradigm based on the +recision o( ho* +rice
reall& moves via )armonic @ave /onvergence
T=
4esou&ces ,entioned
htt+700***eSignalcom
htt+700***)armonicTradercom
htt+700***KaneTradingcom
htt+700***=edianLinecom
htt+700***median-line-stud&com
htt+700***Le(tBrainTradingcom
htt+700***Pi+/lubPro/hartscom
htt+700***Fore%Pitch(or,com
htt+700***BobBoo,ercom
htt+700***Socionomicscom
% =uick 9ntroduction to The >e+ 7aradigm: Harmonic -a&e Con&ergenceTM
Cbest vie*ed b& Mooming in to the !""H levelD

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