Stocks2Follow s Home Page 2004

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Additional work (IPVO.OB, MAMA Added) **************************************************************** The Fibonacci sequence is 1, 2, 3, 5, 8, 13, 21, 34, etc. o Prices do not move in a straight line. They tend to move in undulations, or waves. The combination of an advance, a retracement, and another higher advance forms a wave pattern. This is indicated by a MSL, a MSH, and then a higher MSL. o The first wave in a sequence is known as the seed wave because it is the seed from which the subsequent waves grow. o Many Fibonacci traders believe that there should be no less than eight, and no more than thirteen candles, making up the seed wave (counted from the first MSL to the next, higher, MSL). o The key Fibonacci retracement pivot ratios are 0.236, 0.382, 0.50, and 0.618. (These can also be expressed as percentages 23.6%, 38.2%, 50%, and 61.8%). When prices retrace after establishing a range, they will usually “pivot” at one or more of these points. If prices are going to move back up, ideally they will pivot near the 0.50 retracement level. o A retracement pivot will act as support until prices break below it, at which point it will then act as resistance against prices trying to move back up. Think of “The King is dead, long live the king.” o The key Fibonacci growth target ratios are 1.382, 1.618, 2.618 and 4.236. Typically 161.8 is used as the target for W3, and 261.8 as the target for W5. o The eWave pattern shows that when prices are trending upward, they normally move five waves upward and three waves downward. If the uptrend remains intact, it will then resume with another five waves upward, followed by three waves downward, and so on. These are fractal in nature and so one large wave up in a daily time frame will be made up of five smaller waves on a 30- or 13-minute time frame, etc.