Fibonacci Numbers, “Golden Ratio” – and Global Financial Markets
Elliott waves often relate to each other via the Fibonacci sequence
by Bob Stokes
Updated: August 22, 2019
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. This is known as the Golden Ratio.
Fibonacci ratios appear throughout nature, from the shape of galaxies and seashells to molecules and even the human body:
The Wall Street classic book, Elliott Wave Principle by Frost & Prechter, explains why these ratios should be of keen interest to global investors:
The Fibonacci sequence governs the numbers of waves that form in the movement of aggregate stock prices...
Long- and short-term market charts are often filled with Fibonacci relationships. Here's an example from the same book:
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.
What does a discussion of Fibonacci have to do with today's global stock market action?
Well, here's an example from our August Global Market Perspective:
You'll notice how the Asia Infotech Index began an upward turn right at the point that wave (circle ii) reached 61.8% of wave (circle i). This is just one example of how stock markets the world over often conform to the Golden Ratio.
Fibonacci ratios are also revealing other opportunities elsewhere around the globe.
See for yourself, as you read our Global Market Perspective, risk-free for 30 days. Get the details just below.
Global Markets Are BURSTING with Opportunity -- NOW
Each one of them can be on your screen in seconds -- IF you avail yourself of the insights you'll glean from our 50+ page monthly Global Market Perspective (formerly only available to institutional clients).
Most investors are unaware of all this "low-hanging fruit" because they choose to focus on only one country or market.
In today's connected world, there's simply no good reason to do this. Opportunity is opportunity -- no matter where it is found.
Plus, there's no good reason to miss out on our next Global Market Perspective because you can have instant access for an entire 30 days, risk-free. Learn how to get started by continuing to read …
Here’s how Global Market Perspective helps you see and take advantage of the world’s best opportunities -- starting right now
GMP is your window into EWI’s most important insights -- the patterns of human psychology that drive the markets. You get a quick-hitting, chart-led overview of every major stock index, interest rate, currency, metal, energy market and economy. ALL the world’s major markets, ALL in one issue.
You get a 360-degree perspective you cannot glean from any other publication -- and a powerful advantage over your peers. And with instant access to the current issue, plus the previous two issues, you'll get up to speed--fast.
Our 25+ wave analysts deliver their monthly forecasts to you. They are experts in Elliott wave analysis, a method our subscribers know is unequalled in its objectivity. The Elliott wave principle enables GMP to call for rapid accelerations and sudden price reversals that no other method can foresee.
GMP keeps you ahead of 40+ markets*, including:
U.S. - DJIA, S&P 500, NASDAQ
Europe - DAX, FTSE 100 & 250, CAC 40, AEX, SMI, IBEX 35, S&P/MIB, Dow Jones Euro Stoxx 50, RTS and CECE Overall Traded Index
Asia-Pacific - Nikkei 225, Shanghai Composite, SENSEX, Hang Seng, All Ordinaries, Strait Times Index, KOSPI and TAIEX
EURUSD, GBPUSD, USDCHF, USDJPY, AUDUSD, USDCAD, USDMXN, USDRUB, USDBRL, USDZAR, EURJPY, EURCAD, EURGBP, GBPJPY, NZDUSD and AUDJPY
U.S. Treasuries, Bund, Bobl, Long Gilt, Euribor, Short Sterling, 10-year Australian Bonds, 10-year JGBs
PLUS Gold, Silver, Crude, Natural Gas, and more
(* Markets may vary depending on market movement)
Gives you clear and actionable analysis and forecasts for the world’s major financial markets.
Get insights for the U.S., European and Asian-Pacific main stock indexes, precious metals, forex pairs, cryptos (including Bitcoin), global interest rates, energy markets, cultural trends and more.