Fibonacci Fluff

 

I read a post on Zero Hedge highlighting an alleged Fibonacci time pattern. The chart shows a convincing countdown between the March 2009 low and an exponentially decreasing time period between market peaks.

ES Daily chart

The ZeroHedge post claims to find a Fibonacci pattern in the ES low going back to 2009.

I would expect the pattern to show up in other instruments if the observation had any merit. It’s well known that the strength or weakness of the US dollar largely drives the price movements in equity indices, especially in the S&P 500.

If it shows up in the SPX ETF, surely a similar patten would appear in EURUSD? It’s the most liquid and actively traded forex pair in the world.

A quick look at the EURUSD doesn’t give any encouragement.

Fibonacci time

A current look at the EURUSD doesn’t show any relationship to the ZeroHedge Fibonacci time observation

I even did some cherry picking in the drawing to get the time span between trends to decrease. My original drawing counted the 128 and 97 day periods as a single group.

A lot of readers out there swear by Fibonacci price movements. I’m not sure how many subscribe to analyzing time with Fibonacci.

Do you think it’s a useful tool? Let me know what you think by leaving comments below.

 
Fibonacci Fluff

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About the author

Shaun is a passionate and proud nerd on a wide variety of topics, most of which have absolutely nothing to do with each other. He loves math and systems, which makes him a natural fit for designing trading systems. The most random fact about him is that he speaks fluent Arabic.Shaun's hobbies are running, church and spending as much time as possible with his wife and young son.

 
 

5 Comments

  1. Scott says:

    Hi Shaun,

    Take the Low-to-Low interval, then project from the preceding High —– look at the 0.786 (about four more market days?).

    Cheers!

    • Scott says:

      SPX Lows: 6/4/2012 && 11/16/2012 == 115 days

      115 * 0.786 = 90 days for projection (from prior high)

      SPX Preceding High == 9/14/2012

      TimeTarget = 1/28/2013 (computed in market days)

      — of course, the +/- a few days is acceptable —

      • Hey Scott,

        It’ll be really interesting to see if your Jan 28 prediction plays out or not. I’d rate it as having a decent chance with all the currency wars heating up this week.

        • Scott says:

          Hi Shaun,

          It should be stated:

          Projections of “tops” in an upswing, are for building profit signals.

          Projecting “tops” in downswings ( corrective swings ) requires a quite dissimilar method.

          Just sayin’!!

  2. Patrick says:

    I can’t recall the source but they tested 40% retracements in 0.1% increments all the way to 80% and there was nothing special at all about 61.8%.

    I do agree though that 1m x 1.618m door looks visually appealing…

 

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