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Re: Fibonacci Retracements
Sat, January 7, 2006 - 9:43 PMHey Kent.
The beauty of these numbers lie in the quirky little secrets that reveal themselves when you use the sequence on itself. I don't know much, but I do know this...
If you take any two adjacent Fibonacci values and divide each one by their sum, those values will converge to 38.2% and 61.8%.
1, 2 1/3 = 33.3% 2/3 = 66.6%
2, 3 2/5 = 40% 3/5 = 60%
3, 5 3/8 = 37.5% 5/8 = 62.5%
5, 8 5/13 = 38.5% 8/13 = 61.5%
8, 13 8/21 = 38.1% 13/21 = 61.9%
13, 21 13/34 = 38.2% 21/34 = 61.8%
In stock trading, those 2 percentages represent the "push and pull" of a stock's value. When reviewing a stock cart, values will rise and fall in repetitive retracements of 38 or 62 percent. The process is easy to spot and occurs fractally, meaning that similar patters will develop and decay in larger or smaller forms. This natural rhythm demonstrates itself in every statistical process I can think of (species populations being a good example).
The best way to appreciate this is to see the patterns indicated in a graphic chart.
Here one for ya...
www.investopedia.com/images/...04_1.gif
I haven't tried this myself, though I know a gentleman at work who swears by this. In fact, he doesn't even bother with reading up on company earnings and news; instead, he prefers to simply watch for patterns to play out, and then buys and shorts based on his own intuitive forecast of trends.
If you really would like to blow you mind open on the matter, dig this:
www.investopedia.com/article...acci.asp
May this information deliver insight and epiphany...