Fibonacci Number and Ratio Analysis
retracement level, and an apex reaction time line projection. We subsequently see
a rapid downside price excursion after reacting at the resistive confluence.10.21 Potential Barriers in Fibonacci Projections
When projecting an observed price range, there exists a Fibonacci cluster relation-
ship between the Fibonacci expansion of the range and the Fibonacci projection
levels, measured from each of the 38.2 percent, 50 percent, and 61.8 percent re-
tracement levels of the range. Referring to Figure 10.77, we see that the upside
projection for the range AB from the 38.2 percent retracement level yielded the
greatest amount of resistive clustering above the range, whereas projecting the
range from the 50 percent retracement level yielded the least resistive clustering
above the range. This may be yet another reason why the 50 percent retrace-
ment was considered the most important and significant retracement percentage
by both Gann and Dow. No trader and analyst would ever discount the 50 percent
retracement potential even in today’s algorithmically driven markets.10.22 Fibonacci Time and Ratio Projection Analysis on Elliott Waves
Elliott waves are best described via various Fibonacci operations on its unique 5up‐
3down fractal wave structure. Before analyzing the potential price targets that can
be ascertained by applying Fibonacci operations to impulsive and corrective waves,
we must first understand the ratio relationship between two Fibonacci ratios.Figure 10.77 A Resistive Clustering Based on Expansion and Projections from the
38.2 Percent, 50 Percent, and 61.8 Percent Retracement Levels.