the hAnDbook oF teChnICAl AnAlysIsa significant trough at point A and the next significant peak at point B. The dura-
tion between A and B is then expanded in multiples, according to the Fibonacci
sequence, 0, 1, 1, 2, 3, 5 , 8, 13, 21, 34, 55, and so on. The various tops and bot-
toms fell precisely on the projected time lines. This of course will not always be the
case when performing time zone projections. Most of the time the projected time
line for an expected reversal fails to fall on the exact peak or trough. Neverthe-
less, these projections are still useful especially if they are accompanied by other
bullish or bearish indications. We see the projected tops in Copper testing a strong
resistance zone, which suggest further bearishness. The overbought signals on the
cycle‐tuned stochastic oscillator coincide with the projected tops within the resis-
tance zone. The first tradable point will be point C, since the area of application
lies beyond point B.
One interesting point about Fibonacci time zone projections is that the
counts can have a harmonically related Fibonacci sequence. For example, the
Fibonacci sequence 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, and so on may be rewritten as
0, 2, 2, 4, 6, 10, 16, 26, 42, 68, and so on. The ratio of any number in the new
harmonically related series to its preceding number will still yield 1.618 in the
limit. Therefore, when performing Fibonacci time zone projections, we may in
fact expand the ratios according to the new series but at half of the original
bar interval. For example, instead of using the original sequence on an hourly
chart, we could use the new harmonically related sequence on a 30‐minute
chart. The time line projections will match up precisely with those projected
on the hourly charts.
Fibonacci time zone projections, number counts, and time ratio projections
only forecast potential reversals in price. Unlike conventional cycle analysis, these
time‐based projection techniques do not furnish any information as to whether
the reversal will be that of a top or bottom.
Figure 10.99 Fibonacci Time Zone Projections on the Hourly Copper Chart.
Source: MetaTrader 4