Trading with Fibonacci: Learn How to Find Turning Points

By Susan C. Walker
Fri, 12 Aug 2011 14:45:00 ET
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If you use Elliott wave analysis to trade, then you also trade with Fibonacci ratios. One goes hand in hand with the other. Wayne Gorman teaches our online course that gets you deeper into how you can identify turning points using Fibonacci relationships. Here's a quick Q&A with Wayne.

What made you decide to tackle the topic of identifying turning points using Fibonacci?

Wayne Gorman: After I read Bob Prechter's book, Beautiful Pictures, and saw how vivid the Fibonacci relationships were in the Dow from 1932, I thought it would be worth teaching a course about them. Also, I looked at individual stocks and saw how these Fibonacci relationships could project both price and time.

Why is it important to use Fibonacci with Elliott wave analysis?

Wayne Gorman: They aren't two separate things. We define the Wave Principle as a robust fractal governed by Fibonacci mathematics. Fibonacci is part of Elliott wave analysis. The patterns you see reflect the mathematical relationships. We can't assume that there is a precise formula, because we're talking about the behavior of people when they buy and sell stocks. Someone once gave me this analogy: If you throw a rock across the street, you can use physics to figure out where it will land. But the markets are more like throwing a live chicken across the street. It's alive, so you can't use physics to know where it will land. You have to use social science, which leads us to Elliott wave and Fibonacci analysis.

What is your favorite aspect of Fibonacci?

Wayne Gorman: I like to look for clusters of Fibonacci levels. It's not preferable to make a projection based on only one Fibo level. To find these Fibonacci clusters, you do your analysis at different time frames, from hourly to monthly. Then you see if the same Fibo numbers pop up, maybe even on a 5-minute chart. That is very powerful. It happened to me when I worked with individual stocks and with other markets. The best way to use it is to look at charts at different degrees. That's what I teach in this online course.

Wayne Gorman: First, take the course. Then, definitely get Beautiful Pictures. It is full of great detail without being overwhelming. It also shows you how Fibonacci relationships apply at several different time frames. Also, read Chapter 3 in Elliott Wave Principle to get background on where these Fibonacci relationships come from.

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Wayne Gorman has more than 25 years of experience in trading, forecasting and portfolio management. He began his career at Citibank managing money market and derivative portfolios, and later did forex trading and held various treasury management roles in London and New York. Wayne has used the Wave Principle since 1986. He’s been with Elliott Wave International since 2002, performing Elliott Wave analysis, researching socionomics and teaching EWI’s courses as Senior Tutorial Instructor.

How You Can Identify Turning Points Using Fibonacci

In this powerful two-part online course, EWI Senior Tutorial Instructor Wayne Gorman walks you through a host of charts and real-world exercises, sharing with you valuable tools to help you formulate and execute your own trading strategy by combining wave analysis with Fibonacci relationships. (Running time: 4hrs. 16min.)

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