Debunking Fibonacci's Code...

This is a discussion on Debunking Fibonacci's Code... within the Technical Analysis forums, part of the Methods category; Saw this research paper commented on in my newspaper's business pages today, which used it to stick the boot into ...

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Old Sep 26, 2006, 1:29pm   #1
 
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Debunking Fibonacci's Code...

Saw this research paper commented on in my newspaper's business pages today, which used it to stick the boot into TA of all descriptions. Basically concludes that Fibonnaci type retracements occur no more frequently than would be expected by chance.

(by the way, the thread title comes from the University's press release announcing the publication of the research)

http://www.cass.city.ac.uk/media/sto...in_the_Dow.pdf
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Old Sep 26, 2006, 2:28pm   #2
 
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thats pretty interesting.

confirms my view that if you draw enough lines on a chart, some of them are going to line up with something,
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Old Sep 26, 2006, 3:09pm   #3
 
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Quote:
Originally Posted by Jack o'Clubs
Saw this research paper commented on in my newspaper's business pages today, which used it to stick the boot into TA of all descriptions. Basically concludes that Fibonnaci type retracements occur no more frequently than would be expected by chance.

(by the way, the thread title comes from the University's press release announcing the publication of the research)

http://www.cass.city.ac.uk/media/sto...in_the_Dow.pdf
a typical academic research using static prognosis in a dynamic enviroment

Andy
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Old Sep 26, 2006, 3:32pm   #4
 
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i should have mentioned their study of Fibonacci is actually accurate fib numbers do not always appear if one looks carefully you will see that many ratios derive from the square and the circle so you wont get 0.786 but 0.707
0.786 derives from square root of 0.618 whist 0.707 is the square root of 1.414 which in turn is the square root of 2 (sacred geometry)
point being time and price is working via a muti-dimensional plane e.g
in a moment of time you may see the face of a square if you have 2 maybe 3 points mapped within the square your odds of forecasting the next point ie a retracement or an extension is vastly increased

hence what they should have looked into is if its not fib what is it and back track to how it relates to the square and the circle


Andy
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Old Sep 26, 2006, 3:53pm   #5
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Originally Posted by andycan
hence what they should have looked into is if its not fib what is it and back track to how it relates to the square and the circle
Andy
Why ? Why not a triangle, parabola or a hyberbola or more generally an nth order polynomial, or any other geometric shape or function you care to name.

And by the way, 0.707 is not the square root of 1.414.

Sorry I don't believe a word of it.
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Old Sep 26, 2006, 4:06pm   #6
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I havn't read the paper, but what I'd much rather see is an analysis of market profile levels, VWAP and pivots whose basis is eaily understood without appeals to numerology. And I'd like to see it done over several markets - especially some of the asian markets. Just choosing the dow is a bit limiting considering the interrelation of the major US indices.
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Old Sep 26, 2006, 4:08pm   #7
 
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yep sorry inverse of 1.414 = 0.707
oh yes the triangle plays a major part as for the other shapes simply after thousands of hours analysing measuring and calculating this is my conclusion
the circle and square is at its most simplistic from them you can derive at all other shape related ratios so why complicate it life
as for believing i have no interest in converting you im expressing an opinion which in this particular subject i know what im talking about
certainly the theoretical and how i apply it to my trading trading


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Old Sep 27, 2006, 8:18pm   #8
 
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square circle and triangle

From a circle, square and triangle if you play around a little you get the following numbers:-

1.414 (sqr2)
1.618 (phi or the fib number)
1.272 (sqr phi)

and their inverses
0.618
0.707
0.786

These together with 0.5 (1/2) and 0.382 (1-0.618) do seem to recur a large amount in the mkts esp if one allows a few percent tolerance either way.

Reading the economist this week (page 89) they quote a study which disproves the validity of fib numbers for market trading but again how are these studies done?)

Personally suspect that success has far more to do with psychology (sticking with your trading plan and not taking emotional decisions) and this is very hard.

I'm studying using fib ratios per above based around certain patterns to give an "edge", but fully believe that I and others using this will only suceed if we get the application right

cheers
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