Elliott Wave: Elliott Supporting Gann and Fibonacci
Email This Article
Print This Article
Digg This
Delicious
SubscribeMOST POPULAR ARTICLES
- Kaeppel's Corner: 2009, The Year of Investing Differently
- Option Watch: Jan 6—Mover & Shaker USG Corp.
- Kaeppel's Corner: The Early January Alert
- Weekly Outlook: January 5, 2009
- Hot Shots: "Obamaistic, Not Foolish"
- Closing Wrap-Up, January 5
- Closing Wrap-Up, January 7
- Outside the Box: Controlling Risk Is Key for a Trading Business
- Growth Stock Swing Option: Jan 5, 2009
- Midday Action: January 6
- Kaeppel's Corner: 2009, The Year of Investing Differently
- Outside the Box: Using Government Backed TIPS to Insulate a Portfolio
- Commodities Roundup: Soybeans
- Kaeppel's Corner: The Early January Alert
- Hot Shots: Wind at Our Monbacky?
- Option Watch: Jan 6—Mover & Shaker USG Corp.
- Foreign Exchange: Rise of the Euro
- Options Corner: A Butterfly for Christmas
- Hot Shots: "Obamaistic, Not Foolish"
- Interview Central: Brian Shannon, Part III
- Analytical Toolbox: Tools for Developing Your Outlook, Part I
- Market Insight: Cogent Exhibiting Strong Earnings Growth
- Midday Action: January 8
- Hot Shots: Wind at Our Monbacky?
- Outside the Box: Controlling Risk Is Key for a Trading Business
- Kaeppel's Corner: The Early January Alert
- Economic Watchdog, Jan 7
- Midday Action: January 7
- Option Watch: Jan 6—Mover & Shaker USG Corp.
- Commodities Roundup: Soybeans
SPONSORED LINKS
February 29, 2008
Research into relationships within Elliott Wave patterns has lead to some interesting discoveries that support a theory used heavily in both Gann and Fibonacci analysis. Before I explain further, let’s look at how this conclusion was reached.
In building the ProfitSource Software, we decided that we needed to be able to give targets as to where Waves within an Elliott pattern may finish. In other words, time and price projections – what we call TAPPs. To do this, 20 years of data and over 30, 000 completed Elliott Wave patterns were analysed.
From this analysis we found that if you compare the length in price of Wave 4 with the length in price from the start of Wave 1 to the end of Wave 3 (0-3), a clear pattern emerged. That pattern was essentially this: 66% of all retracements finished on or before 38% of the major range – in this case 0 – 3. Where do we recognize this from? The meaning of Life, the Universe and Everything? Tom Scollon’s favourite number?? Well maybe, but actually 38.2% relates to Fibonacci analysis and the golden ratio. Many technical traders have used this level over the years and it is mentioned in countless text books and journals. However, it is always good to see these things proven by statistical analysis!
38% Retracements
click here for more detail
Moving on from this, 90% of all Wave 4s finished at or before 50% of 0 – 3. For those acquainted with Gann, you will no doubt recognise 50% as a figure Gann paid particular attention to. Seeing the significance of the 50% proven by statistical analysis was obviously an interesting discovery, especially for someone who has studied the work of W. D. Gann and David Bowden.
50% Retracements
click here for more detail
So the next time a market bounces off the 50% level from a previous major range, remember that Gann referred to this level long before the kind of analysis we have at our fingertips was ever available. The philosophical question for all of us is, “Do these levels and patterns work because they occur in all walks of nature or are they a self-fulfilling prophecy?” Personally I think it’s a bit of both!
Happy Trading
Jordan Craw
Trading Tutors Team
© Copyright 1995-2009 Optionetics. All rights reserved. This material is for personal use only. Republication and re-dissemination, including posting to newsgroups, is expressly prohibited without the prior written consent of Optionetics. Optionetics is a registered trademark of Optionetics, Inc.