Fibonacci Number and Ratio Analysis
area of application is after the trough indicated on the chart. Note that Fibonacci
arcs, being a dynamic overlay indicator, will yield different results depending on
whether a logarithmically or arithmetically scaled chart is employed.
Figure 10.74 is an example of a supportive confluence comprised of Fibonacci
arcs, retracements, and a prior support level (price at point C).10.20 Supportive and Resistive Fibonacci Clusters
Whenever two or more Fibonacci levels are concentrated around a certain price level,
we say that there is a cluster or confluence of Fibonacci levels. These Fibonacci clusters
may be either supportive or resistive, depending on whether price is above or below the
cluster. If price is above it, we say that we have a supportive confluence or cluster of Fibo-
nacci levels. Conversely, when price is below it, we say that we have a resistive confluence
or cluster. This is because confluences or clusters represent barriers to price action.
There are various Fibonacci operations that may result in clustering.■ (^) Retracement clusters occurring as a result of retracing overlapping price ranges
■ (^) Extension clusters occurring as a result of extending multiple ranges
■ (^) Expansion clusters occurring as a result of expanding multiple price ranges
Figure 10.73 Fibonacci Resistive Arcs on Facebook Inc.
Courtesy of Stockcharts.com
Figure 10.74 Fibonacci Resistive Arcs on the CRN Index.
Courtesy of Stockcharts.com