The Handbook of Technical Analysis + Test Bank_ The Practitioner\'s Comprehensive Guide to Technical Analysis ( PDFDrive )

Fibonacci Number and Ratio Analysis

The 100 percent upside projection level is:

= + ×

=+ ×

Higher Trough Price Range Projection Ratio

C Price Range

( )

( 1.. )

$ ($. )

$

0

1 0

115

=+×

=

85 30

The 461.8 percent upside projection level is:

= + ×

=+ ×

Higher Trough Price Range Projection Ratio

C Price Range 4

( )

( .. )

$ ($. )

$.

618

85 30 4 618

223 54

=+×

=

10.7.2 Calculating potential support via Fibonacci

Downside projection Levels

When calculating Fibonacci downside projection levels, we use the lower signifi-

cant peak at point C as the base for the projection.

Assume that the significant peak and trough of an observed price range are

point A and point B, respectively. Assume that the peak at point A is at the price

level of $200, the trough at point B is at $150, and the lower significant peak at

point C is at $180. Refer to Figure 10.31 as a visualization guide.

The formula for calculating downside projection levels above a given price

range is:

Lower Peak (Price Range Projection Ratio)− ×

In our example, the observed the price range AB is:

Price Range Peak Trough

A B

200 150

50

=−

=−

=−

=

$ $

$

(Note: We always subtract the trough from the peak, regardless of whether it

is for a downside or upside projection calculation, as the price range must always

be a positive value.)

The 61.8 percent downside projection level is:

= − ×

=− ×

Lower Peak Price Range Projection Ratio

C Price Range 0 61

( )

(. 88

180 50 0 618

149 10

)

$ ($. )

$.

=−×

=