Fibonacci Cycle

Fibonacci number is a numerical series depicting the nature’s expansion, which is also the principle of market movement in terms of price and time cycle.

The Fibonacci number starts with 1, 1 plus 1 equals 2, 1 plus 2 equals 3, 2 plus 3 equals 5, 3 plus 5 equals 8, etc.

The Fibonacci number can be interpreted as the numerical expansion based on the “Golden Ratio” 1.618 as well as the numerical contraction based on the ratio of 0.618.  See table below.

When Fibonacci number is used in market movement analysis, the price movement sometimes fluctuates in terms of Fibonacci number.  See chart below.




Sometimes, market time cycle also moves in tandem with Fibonacci number in terms of minutes, hours,  days, weeks, months and years.  See Chart below.



Using Fibonacci ratio 1.618, we can project the market price target of market actions.  Fibonacci ratio 0.618 is instrumental in calculating the market reactions price target.  See below.



In the same way, Fibonacci ratio 1.618 is commonly used to project future time reversal point of market price.  Fibonacci ratio 0.618 is used for timing of the end of market correction.  See below.




Books Recommended:

Elliott Wave Principle: Key to Market Behavior  by A. J. Frost, Robert J. Prechter