The Fibonacci sequence of numbers was discovered (actually rediscovered) by Leonardo Fibonacci da Pisa, a thirteenth century mathematician. Fibonacci numbers and ratios are present throughout nature. When R.N. Elliott wrote Nature’s Law, he explained how the Fibonacci sequence provides the mathematical basis of the Wave Principle.

Elliott wave traders calculate Fibonacci price levels to help identify target zones and possible ending points for wave patterns. For example, it’s common for wave 2 to end at .618 the distance of wave 1. Combining the Elliott wave price structure with common Fibonacci ratios helps traders identify target zones and fine tune their entry, exit and risk management strategies. In Traders Classroom, Jeffrey teaches you how to apply the most common relationships to your trading, plus shares some of his own Fibonacci-related techniques.

For a full discussion of Elliott waves and Fibonacci ratios, read Chapter 4 of Elliott Wave Principle.