The Euro Rally and a Key Fibonacci Ratio
The Golden Ratio is highly useful in forecasting key junctures in forex and other markets
by Bob Stokes
Updated: December 31, 2019
The Elliott wave method of forecasting financial markets is mathematically based on the Fibonacci sequence of numbers.
After the first several numbers in the sequence, the ratio of any number to the next higher is approximately .618 to 1, and to the next lower number approximately 1.618 to 1.
Hence, 1.618 (or .618) is known as the Golden Ratio. It is highly useful in setting price targets and forecasting key junctures in price charts.
Let's look at how this knowledge was applied in a discussion about the euro vs U.S. dollar in our Dec. 23 U.S. Short Term Update:
[A downward Elliott wave] in the [euro] bounced off what appears to be a significant, .618 retracement level and may now be headed higher in an [upward] wave.
If this is the case, its rise should accelerate within the next week or so.
Well, the euro did just that.
Here's a follow-up from our Dec. 27 U.S. Short Term Update:
It didn't take long to fulfill Monday's forecast for an upward acceleration in the euro. Including today's spike, the euro is up more than 1% since [the prior downward] wave bottomed on December 20.
In the latest issues, our U.S. Short Term Update editor goes on to mention what he expects next for the euro -- and for the U.S. Dollar Index.
Indeed, he used the word "confidently" to describe his Elliott wave labeling of the U.S. Dollar Index.
Besides the Golden Ratio, there are other Fibonacci relationships in chart patterns that help our Elliott wave experts help our subscribers -- not only for currencies, but also for major markets like stocks, bonds, gold and silver. Not incidentally, our U.S. Short Term Update covers those markets, too.
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This is from our Dec. 23 U.S. Short Term Update
Trading may slow to a crawl for the holiday, but once it picks up again, the action should be...
Our analyst then goes on to describe what type of stock-market price action is anticipated -- and why.
The "why" has to do with a clear Elliott-wave setup in the Dow Industrials' chart.
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