Fibonacci and Gann Applications in Financial Markets

1 Fibonacci and gann Applications in Financial MarketsJWBK027-FM[i-x].qxd 3/31/05 4:08 PM Page i QUARK04 27A:JWBL027:Chapters:Chapter-FM:WILEY TRADING SERIESS ingle Stock futures: A Trader s GuidePatrick L. Young and Charles SideyUncertainty and Expectation: Strategies for the Trading of Risk Gerald Ashley Bear market Investing StrategiesHarry D. SchultzThe Psychology of Finance, revised editionLars TvedeThe Elliott Wave Principle: Key to market BehaviorRobert R. PrechterInternational Commodity TradingEphraim Clark, Jean-Baptiste Lesourd and Ren Thi blemontDynamic Technical AnalysisPhilippe CahenEncyclopedia of Chart PatternsThomas N.

2 BulkowskiIntegrated Technical Analysis Ian CopseyFinancial Markets Tick by Tick: Insights in Financial Markets MicrostructurePiere LequeuxTechnical market Indicators: Analysis and PerformanceRichard J. Bauer and Julie R. DahlquistTrading to Win: The Psychology of Mastering the MarketsAri KievPricing Convertible BondsKevin ConnollyAt the Crest of the Tidal Wave: A Forecast for the Great Bear market Robert R. PrechterJWBK027-FM[i-x].qxd 3/31/05 4:08 PM Page ii QUARK04 27A:JWBL027:Chapters:Chapter-FM:FIBONACC I AND GANNAPPLICATIONS IN FINANCIALMARKETSP ractical Applications of Natural and Synthetic Ratios inTechnical AnalysisGeorge Alexander MacLeanJWBK027-FM[i-x].

3 Qxd 3/31/05 4:08 PM Page iii QUARK04 27A:JWBL027:Chapters:Chapter-FM:Copyrigh t 2005 John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester,West Sussex PO19 8SQ, England Telephone (+44) 1243 779777 Email (for orders and customer service enquiries): our Home Page on or Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system ortransmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning orotherwise, except under the terms of the Copyright, Designs and Patents Act 1988 or under the terms ofa licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London W1T 4LP,UK, without the permission in writing of the Publisher.

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6 Some content that appears in printmay not be available in electronic Library Cataloguing in Publication DataA catalogue record for this book is available from the British LibraryISBN-13 978-0-470-01217-8 (HB)ISBN-10 0-470-01217-X (HB)Typeset in on 13 pt Times by TechBooks, New Delhi, and bound in Great Britain by International Ltd, Padstow, book is printed on acid-free paper responsibly manufactured from sustainable forestry in which at least two trees are planted for each one used for paper [i-x].

7 Qxd 3/31/05 4:08 PM Page iv QUARK04 27A:JWBL027:Chapters:Chapter-FM:Contents Prefaceix1 Introduction to and History of the Fibonacci Sequence12 Application to Financial market Analysis93 Other Applications of the Fibonacci Retracements and Extension 274 Charting and Difficulties: A Historical Perspective415 Common Errors in Application of Fibonacci Retracements and Extension556 Application and Common Errors in Fibonacci Fanlines757 Application and Common Errors in Fibonacci Timelines 1038 Total Analysis Pulling All the Skills and Techniques Together1279 gann , The Misunderstood Analysis14510 Other Interesting Studies Using Synthetic Ratios17311 Conclusion193 JWBK027-FM[i-x].

8 Qxd 3/31/05 4:08 PM Page v QUARK04 27A:JWBL027:Chapters:Chapter-FM:viConten tsAppendix 1 Data Problems203 Appendix 2 Glossary of Common Terms 215 Bibliography221 Index223 JWBK027-FM[i-x].qxd 3/31/05 4:08 PM Page vi QUARK04 27A:JWBL027:Chapters:Chapter-FM:For Angus and Jenny for all the skills and encouragement and to the Great, theGood and the Gurus for the knowledgeCuimhnichibh air na daoine bho n d thainig sibh(Gaelic proverb)JWBK027-FM[i-x].qxd 3/31/05 4:08 PM Page vii QUARK04 27A:JWBL027:Chapters:Chapter-FM:Acknowle dgementsThanks are due to Equis International, , a wholly owned subsidiaryof Reuters PLC, for allowing the use of the MetaStock charting system for produc-tion of the charts in this publication.

9 Without this charting program the book wouldbe very special thank you to all concerned with the publication of this title, espe-cially those leading me by the hand at John Wiley & Sons. Writing this book was adaunting task and the support from editorial, production and marketing staff hasbeen [i-x].qxd 3/31/05 4:08 PM Page viii QUARK04 27A:JWBL027:Chapters:Chapter-FM:PrefaceT echnical analysis is not a difficult subject for study, but it does suffer from a badpress from time to time. It attracts strong personalities, as it is a very small pond andstrong characters tend to stand out more and get heavy coverage in the media; wecan suffer from the bad press by having far too many technicians saying they fore-casted various key corrections in the past.

10 These boasts have to be taken with apinch of salt. Publicity for technical analysis in the media is a good thing as techni-cal analysts are not shy and tend not to hide under bushels. However, within our owncommunity the real stars are the quiet ones who do sterling work and research dayin, day out with little or no are the experienced analysts who take time to dispense their accumulatedknowledge of market analysis and strive to further the bounds of technical educa-tion and study. market understanding has fallen out of favour in recent years astraders shrink the timeframes necessary for a profitable trade.