See examples in a chart of the S&P 500
By Elliott Wave InternationalFibonacci is the mathematical basis of the Wave Principle. You will often find that Elliott waves correct in terms of Fibonacci ratios. The following article explains what you can expect when a market begins a corrective phase.
If you are interested in learning more about using Fibonacci in your trading, get your free 14-page eBook, How You Can Use Fibonacci to Improve Your Trading.
Retracements -- Corrective Waves
Below you can see an impulsive 5-wave move on the chart of the S&P 500. Wave 2 is an expanded flat. Wave 4 is a zigzag. Let's look at the retracements that waves 2 and 4 make.
In a nutshell, this is what we mean when we say that Elliott waves often correct in terms of Fibonacci ratios.
EWI Senior Tutorial Instructor Wayne Gorman explains:
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