econintersect.com
 FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email. Name: Email:

posted on 08 January 2017

# How Fibonacci Ratios Govern The Stock Market

from Elliott Wave International

In the 1930s, Ralph Nelson Elliott observed the Wave Principle in the stock market. Yet his work gained little notice from Wall Street. In the decades that followed, a handful of analysts and forecasters kept Elliott's work from falling into obscurity.

Learn How to Find Trading Opportunities Using Fibonacci

This free eBook takes the complexity out of combining wave analysis with Fibonacci relationships. In 14 chart-filled pages, you'll learn techniques that you can apply to your trading right away to find targets and turning points in the charts you follow.

But in recent decades, scientists re-discovered Elliott.

Consider this 1996 quotation from "Stock Market Crashes, Precursors and Replicas" in France's Journal of Physics:

We speculate that the 'Elliott waves' . . . could be a signature of an underlying critical structure of the stock market.

Robert Prechter put it this way:

Scientific discoveries have established that pattern formation is a fundamental characteristic of complex systems, which include financial markets. Some such systems undergo “punctuated growth,” [or] building fractally into similar patterns of increasing size. This is precisely the type of pattern identified in market movements by R.N. Elliott.

Nature is full of fractals.

Consider branching fractals such as blood vessels or trees: A small tree branch looks like an approximate replica of a big branch, and the big branch looks similar in form to the entire tree.

Now consider that most of nature's fractals are governed by the Fibonacci sequence. It begins with 0 and 1, and each subsequent number is the sum of the previous two:  0,1,1,2,3,5,8,13,21,34,55 and so on. The Fibonacci sequence also governs the number of waves that form in the movement of aggregate stock prices.

Take a look at this figure from the Wall Street classic book, Elliott Wave Principle:

The book notes:

The essential structure of the market generates the complete Fibonacci sequence. The simplest expression of a correction is a straight-line decline. The simplest expression of an impulse is a straight-line advance. A complete cycle is two lines. In the next degree of complexity, the corresponding numbers are 3, 5 and 8. This sequence can be taken to infinity.

Right now, the math of the market reveals a big clue about the trend of stocks.

### Learn How to Find Trading Opportunities Using Fibonacci

This free eBook takes the complexity out of combining wave analysis with Fibonacci relationships. In 14 chart-filled pages, you'll learn techniques that you can apply to your trading right away to find targets and turning points in the charts you follow.

This article was syndicated by Elliott Wave International and was originally published under the headline How Fibonacci Ratios Govern the Stock Market. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

>>>>> Scroll down to view and make comments <<<<<<

## Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.

Econintersect Contributors

 The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
 Was Marx Right? Angst in America, Part 5: The Crisis We Can’t Muddle Through
News Blog
 Wiping Out Jobs Growth With Robotics This Fantastic Idea For A Circular Runway Is Sadly Going Nowhere Research Check: Are Aussie Women Ageing Up To 20 Years Faster Than US Women? UFO Sightings Are At Record Heights What We Read Today 28 April 2017 Kim Jong Un Pretends To Fly An Airplane 21 April 2017: ECRI's WLI Growth Index Continues to Slow Final April 2017 Michigan Consumer Sentiment Continues Positive Trend April 2017 Chicago Purchasing Managers Barometer New Orders Close To Three-Year High Advance Estimate 1Q2017 GDP Quarter-over-Quarter Growth at 0.7 Percent. Rail Week Ending 22 April 2017: Marginally Slower Week March 2017 Median Household Income Not Significantly Different Infographic Of The Day: The Largest Company Headquartered In Each State
Investing Blog
 The Last Time Investing.com Weekly Wrap-Up 28 April 2017
Opinion Blog
 New 'Gaullism' Rises In France Blockchain: A Technology Whose Time Has Come
Precious Metals Blog
 A New Age For Gold
Live Markets
 28Apr2017 Market Close: Wall Street Closed Mostly Down On News The U.S. Economy Grew At Its Weakest Pace In Three Years, WTI Crude Settles In The Low 49 Handle
Amazon Books & More

 .... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet Asia / Pacific Europe Middle East / Africa Americas USA Government

 navigate econintersect.com

### Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government

### RSS Feeds / Social Media

Combined Econintersect Feed
Digg