Elliott Wave InternationalmyEWISocioniomics.Net
Home > Stocks

(Video) Does Fibonacci Analysis Reveal the Stock Market Trend?
The new July-August Elliott Wave Theorist uses Fibonacci ratios to anticipate prices

By Bob Stokes
Mon, 21 Jul 2014 16:00:00 ET
Add to Facebook Add to Twitter Email to a friend Printer Friendly

Editor's note: You'll find the text version of the story below the video.

Fibonacci helps tell the story of an epic stock market trend.
Look inside the new double issue of The Elliott Wave Theorist for 2 weeks -- only $1 »

Fibonacci numbers follow a sequence that begins with 0 and 1, and each subsequent number is the sum of the previous two (0, 1, 1, 2, 3, 5, 8, 13, 21, 34, and so on). 

After the first several numbers in the sequence, the ratio of any number to the next higher is approximately .618 to 1; its ratio to the next lower number is approximately 1.618 to 1.
Fibonacci ratios appear throughout nature, from the shape of galaxies and seashells to molecules and even the human body.
 Here's why these ratios should be of keen interest to investors:
The Fibonacci sequence governs the numbers of waves that form in the movement of aggregate stock prices...
Elliott Wave Principle: Key to Market Behavior, 10th edition, p. 122
Long- and short-term market charts are often filled with Fibonacci relationships. Here's one example from Elliott Wave Principle with the accompanying commentary:
[The chart] illustrates the natural law of the inwardly directed Golden Spiral and is governed by the Fibonacci ratio. Each wave relates to the previous waves by .618. In fact, the distances in terms of Dow points themselves reflect Fibonacci mathematics. ... Showing the 1930-1942 sequence, the market swings cover approximately 260, 160, 100, 60, and 38 points respectively, closely resembling the declining list of Fibonacci ratios: 2.618, 1.618, 1.00, .618 and .382.
Elliott Wave Principle: Key to Market Behavior, 10th edition, p. 123
What does a discussion of Fibonacci have to do with today's stock market?
The just-published double issue of The Elliott Wave Theorist says:
Waves in the Dow Jones Industrial Average produce mathematical poetry in time and price...
Sometimes the poetic expression is a quasi-geometric form. Other times it is a set of Fibonacci price and time relationships. When both occur, it rhymes. ...
There will come a day when you can see both the structure and the time and price relationships clearly, and everything falls into place... Let’s present the evidence.
The new July-August Theorist includes 23 chart-filled pages. See it for yourself. The Fibonacci analysis in the new issue is comprehensive and tells you where EWI expects the market to go next.


FFSEWI's Financial Forecast Service equips you to think, trade and invest independently from the crowd. Here's what you'll get, risk-free:
  • Short Term Update -- Intensive forecasts and analysis 3x/week for U.S. stocks, gold, silver, bonds and the U.S. dollar.
  • Financial Forecast -- In-depth, intermediate-term perspective on U.S. stocks, gold, silver, bonds and the U.S. dollar.
  • Theorist -- Bob Prechter's monthly big-picture insights.
Get complete details and start your risk-free trial today >>
Free Video Course
Learn the Why, What and How of Elliott Wave Analysis

Financial media use news and economic events to explain market moves. Steer clear of this misguided approach. Take part in the Elliott Wave Crash Course to learn what really moves the markets.

© 2016 Elliott Wave International
TRUSTe online privacy certification

The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International’s market-oriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.