04/07/2009 Using Fibonacci to determinate mark…

Using Fibonacci to determinate market goals

Fri, Jul 7 2006, 20:54 GMT
by Facundo Molina
MolFX - Management

Part I: Introduction

Part II: Fibonacci's applications

Part III: Application in the Objective Market

Part IV: Model's description

Part V: Model's description (cont)

Part VI: Final Results and Conclusion

Part I: Introduction
Leonardo Pisano, better know as Fibonacci, explained the development of natural growing phenomenon through his famous numerical sequence. He proved
that this series was highly connected w ith the growing of dynamics structures, and the most important use is relationated with its ratios.
The objective of the present work is to demonstrate that the application of these rules, have an important probability of success in financial markets, and
principally in FOREX.

We start with the premise that the human society is a dynamic system, and its behavior is represented in financial markets through prices.

That is the reason why we will try to prove that there is an important probability to predict the behavior of prices in Forex, joining Fibonacci numbers with
Zig Zag Oscillator.

So, we w ill try to determine the objectives zones, or where the prices tend to go using Fibonacci. We w ill study the prices corrections against the major
trend.

The Method: Fibonacci, And His Legacy

In the beginning, w e start using the most important correction ratios discovered by Fibonacci. These ratios came from the famous Sequence.

Many contributions were applied to mathematics science by Fibonacci, but the most relevant discover w as denominated by the French mathematician,
Edouard Lucas, as Fibonacci Sequence in the XIX Century.

The Sequence. Properties And Principal Characteristics

This sequence is a rule that explain the development of natural growing phenomenon. Formed by adding the last tw o numbers to get the next one.

The formula is:

The Fibonacci Sequence is: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, etc.…

Fibonacci proved that this sequence could be found in the evolution of many natural phenomenons. He used as example the rabbit reproduction process.
He wanted to know how many rabbits will be born in a year, knowing that:
A couple of rabbits could birth since the fist month, but the others couples just can do it since the second month.
Each labor brings two new rabbits as result.
If w e suppose that any rabbit die, the process will be the like this:
In the first month there will be born two rabbits. So, we will have tw o couples.
During the second month, the initial couple w ill born another couple, and then will be three pair of rabbits.
In the third month, the initial couple, and the second one, w ill produce new couples. Then, there w ill be five couples.
Continuing with the present analysis, w e could see in the next table the results of the rabbit’s couples forming the Fibonacci Sequence.

Despite all this, we find the major utility of the sequence in these fundamentals properties:
If w e divide tw o consecutives numbers, 1/1, 1/2, 2/3, 3/5, 5/8, 8/13, etc. We could find that the results tend to 0.618.
If w e divided two non consecutive numbers from the sequence, ½, 1/3, 2/5, 3/8, 5/13, 8/21, etc. We could see that the result obtained tend to 0.382.
If w e calculate the division betw een any numbers of the sequence to the next lower, 21/13, 13/8, 8/5... the results tend to 1.618, which is the opposite of
0.618.
If w e calculate the division betw een any numbers of the sequence to the higher low non consecutive, 21/8, 13/5, 8/3... the results tend to 2.618, which is
the opposite of 0.382.
E.g.; 144 / 233 = 0,618 144/89= 1.6179

The ratio 1.618, or the opposite 0,618 were denominated by the Old Greeks “Golden ratio” or “golden section”, and they are represented with the Greek
letter phi, referenced by the greek author, Phidias. Chirstopher Carolan mentions in his book that Phidias was the author of the Athens statues in the
Parthenon and The Zeus in Olympus. He considered very important the phi number in Art, and in nature.

This ratio, who’s opposite is the same number more the unit, characterize all the progressions of this kind, w here ever it is the initial number.

The most important ratios are 0,618 and it’s opposite 1,618, but not the only ones. W e can continue on the ratios derivation of the Sequence, just
increasing or decreasing the distance between the Fibonacci numbers.

So, each number is relationated with the higher next trough the 0,382 ratio, and w ith the low er next with the opposite ratio, 2,618.
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04/07/2009 Using Fibonacci to determinate mark…
E.g.: 144/377=0,3819 144/55=2,618

In the same w ay, the division between a number and the third next, bring as a result, 0,236, and the proportion between a number and the third low er
next is 4,236.

E.g.: 89/377=0.236 144/21=4,238

The same occurs with 0,618 and 1,618, these ratios are more exactly, when w e use higher fibonacci numbers. The next table shows some examples:
Ratios de 1,618 Ratios de 0,618
1,618 2 = 2,618 0,618 2 = 0,382
1618 3 = 4,236 0,618 3 = 0,236
1,618 4 = 6,854 0,618 4 = 0,146
Carolan emphasized that the Fibonacci ratios could be order as follows: 0,146, 0,236, 0,382, 0618, 1, 1,1618, 2,618, 4,236, and 6,854. Then we could find
and additive sequence with the properties of the Fibonacci Sequence, because each number is the sum of the immediately two before, and moreover, each
number is 1,618 times the number before.

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal
disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for
you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that
you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the
risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has
not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.

Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as
general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss
of profit, which may arise directly or indirectly from use of or reliance on such information.

©2009 "FXstreet.com. The Forex Market" All Rights Reserved.

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04/07/2009 Part II: Fibonacci's applications
Part II: Fibonacci's applications
Wed, Jun 14 2006, 12:24 GMT
by Facundo Molina
MolFX - Management

The verification of the Fibonacci Sequence in many real phenomenon’s, makes lots of people decide to study the relationship between these mathematics of
nature and the behavior of the financial markets.
May be this is the most curious and captivating, so it has be proved that the Fibonacci Sequence appears in nature, forming physical structures and defining
the process of chance of this dynamics structures. Many authors have mentioned this concept in theirs books.

At the end of XIX Century, a botanist calls A. H. Church, had discovered, studying the sunflow er the presence of Fibonacci. His seeds are arranged around
the middle in 89 curves, turning 55 of these in one direction and the others 34 to the opposite direction.

From here, the botanists have found Fibonacci numbers in different pieces of Nature. For example, the margarita forms spiral model similar of the sunflower
in the middle of his flower. There are also many varieties of flowers where the numbers of petals are Fibo numbers.

A mathematician from Arizona University, Alan Newell, and his pupil Patrick Shipman have been studying recently the cactus to determinate the reason why
this numeric pattern is universal. These researchers analyzed the form of this plant, his skin size, and another biomechanics that surge in his grow th. When
their introduced all of the data in the computer, found by surprise, that the more stable configuration followed the forms based of the Fibonacci Sequence.

We can find other applications, for example the spiral that many trees developed in their branches; the number of little branches in a big one, and the
follow of the same vertical is a Fibonacci number, if w e use to calculated one of the to branches.

The Fibonacci numbers appear also, in the human body. The men have five appendixes (tw o arms, tw o legs, and a head); each arm and each leg are divide
in three parts, ending each of them in five appendixes (five fingers), divide each of them in three little phalanx, except two of them which have just tw o. In
the same w ay, the head has three outstanding characteristics (two ears and a nose), and three inlaid characteristics (two eyes and a mouth). In the end,
the human body has five physical senses: sight, ear, sense of smell, taste, and touch.

”The human body presents the golden number or phi”. Leonardo Da Vinci, in his famous picture, the Vitrubio man, illustrated the Luca Pacioli book “Divine
Proportion” edited in 1509. This book, describes w itch must be the proportion of artistic creations. He proposes that a human figure w here each part of the
body must respect a specific proportion to be harmonic. This perfect man, for Pacioli, is based on the following mathematical calculation: the high of the
men, (side of the square) divided the distance between the navel and the extreme of the extended hand (circle radio), represents the divine number.

Also, many animals body have a trunk and five appendixes, (head and four legs); birds have 5 projections too: a head tw o legs, two wings.

Fibonacci is also present in music: see for example the piano. The division of the keyboard in scales of eight white keys and five black ones; the black keys
are distributed all along the keyboard in groups of three and two. A complete keyboard has eleven scales, and could have one more key, meaning 89.
The chords that allow us to identify any tone are formed by the first, third, fifth and eight note of the scale.

Since professors Church and Hambridge, the interest on Fibonacci numbers by many researchers end in the creation in 1963 of the Fibonacci Society in
California, formed by mathematics, w itch main objective is exchange ideas and stimulate research on Fibonacci’s relationship w ith nature.

It has been proved that the Fibonacci sequence is highly connected with the progressive development of dynamical structures, an as society is a dynamical
system, human history could be running according to this Nature Law, based on the proportion 3-5 or 0,618; if we add to this concept, the idea that
financial markets are the reflect of mass behavior, w e can conclude that Fibonacci sequence could be applicable to those markets.

In the next session based on these concepts, we will develop a model to prove the proposed objective on this work.

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal
disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for
you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that
you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the
risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has
not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.

Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as
general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss
of profit, which may arise directly or indirectly from use of or reliance on such information.

©2009 "FXstreet.com. The Forex Market" All Rights Reserved.

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04/07/2009 Part III: Application in the Objective …
Part III: Application in the Objective Market
Wed, Jun 14 2006, 12:25 GMT
by Facundo Molina
MolFX - Management

Definition Of The Sample

Once chosen the objective market, the study w as focused in 4 (four) currency pairs, in the Forex International Market.
In order to make it as objective as possible, the study was based in those pairs with higher volume trade in the Forex market, because they accumulate the
85% of the daily transactions.
Pair EUR (Euro)/USD (United States Dollars)
Since it’s apparition in December 1999, the Eur, soon replace the German Mark, and becomes the second currency in the world, getting day by day more
importance. The strength of EUR is based on the power of the European Economic Community, no matter how many political factors may affect it.

Pair GBP (Great Britain Pound)/USD

It was the reference currency till Second W ar, and most of the transaction involving it. Took place in London, the biggest international market regardless
his small volume during American market sessions.

Pair USD/JPY (Japanese Yen)

This is the third currency trade in the world, making market liquid 24 hours a day. Notice that oriental economy moves according to Japan, and so, Yen is
very sensitive to oriental agricultural production, technological factors, salaries and NIKKEI.
Pair USD/CHF (Helvetic Confederation Franc)
This is the other European currency not included in Eur or G-7, but at the same time, it seems favour related to politic uncertainly of the European
Community. Practically, w e can say that Sw iss Franc moves almost the same w ay that EUR in relation with the USD.

Sample: Scope
This w ork w as developed based in the follow ing time frames, because they represent a prominent quantity of subjacent quotation time, and allows
reducing “noise”, in short time:
Daily sessions: 24 hours of transactions or quotations. We use it to deeply analyze the trend in Medium Term (weeks) and Long Term (months).

4 (four) hours sessions, that gives us more detail of temporality, due to in a 24 hours day trading there are moments w ith higher transaction volume, like
the opening or close of the biggest w orld financial centers (Tokyo, London, Frankfurt and New York).

Anyway, we invite the readers to extend this analysis to sessions w ith more or less duration, w here you can find similar results.

Field Work
Once introduced Leonardo Pisano and his invaluable contribution to science, we will stop at his more important ratios, specifically in the target zones
created because of them.

Based on w hat we can see in financial markets, there are retracements or backward movements in a certain percentage. According to Fibonacci, in a strong
tendency, a minimum retracement generally address in its first impulse to the zone of 23.6% of the rally; and in case this zone is broken, the quotation
usually goes to the zone near the 38.2%, then to the 50 % zone, and in a weaker tendency, the maximum retracement could reach the 61.8%; but if this
point is broken, the quotation w ill continue to a point not consider by Leonardo Pisano, but very important to remark, because of the results given in our
diary work, the 76,4 % to finally reach the 100 %.

Once the quotation runs over the 100 % retracement, and confirms that point, w e can suppose that the dominant tendency has changed, and price will
look for other objectives, that according to Fibonacci, w ill be at first place the 161.8%, then the 261.8% and finally the 423.6%.

In Table 2, you can see Fibonacci ratios, coming from the division of each number of the numerical sequence he developed by the one before it.

Now w e propose combine the price Fibonacci retracements with the Zigzag Oscillator, in a major defined trend, to corroborate the accomplishing of the
target quotations.

The popularity and use of Zigzag oscillator are based in three main characteristics: is a good “noise” filtering; it represents the main trend clearly, and is a
simple indicator for the market price final interpretation.

How ever, this oscillator has as main disadvantage his natural dynamic: the last line of its draw marking trend could be tricky and needs confirmation.

It w orks simply presenting the major movement by connecting picks (high prices) and depressions (low prices) with straight lines.

The inclination parameter of the slope in the specific quotation specifies the percentage that this price has to move to draw a new line or Zigzag line.

Its formula is:

ZZO= 100 * (CL-BASE)/BASE
Where base is the initial price (maximum or minimum) or the Zigzag leg
CL or Last Closing of the before session
This oscillator filters the changes in the subjacent chart, smaller than the quantity specified in the inclination parameter of the scope. It only shows
significant changes. The minimum price movements are fixed as percentages, and could be based in close price, or in maximum/minimum ranges.

For example, the Zigzag established in a 10% respect to the OHCL (Open-High-Close-Last) candles, will draw a line that will only change direction if the
changes betw een maximum and minimum exceed the 10%. This means any smaller variation will be ignored.

Then, after we defined the system used to calculate the bullish or bearish rallies objectives, through Zigzag Oscillator, we start the empiric confirmation of
the information for each pair under study, main subject of the next session.

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal
disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for
you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that

fxstreet.com/…/2006-06-14.v03.html 1/2
04/07/2009 Part III: Application in the Objective …
you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the
risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has
not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.

Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as
general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss
of profit, which may arise directly or indirectly from use of or reliance on such information.

©2009 "FXstreet.com. The Forex Market" All Rights Reserved.

fxstreet.com/…/2006-06-14.v03.html 2/2
04/07/2009 Part IV: Model's description
Part IV: Model's description
Wed, Jun 14 2006, 15:33 GMT
by Facundo Molina
MolFX - Management

Firstly, I whish to remark that the different Technical tools named in this work, w ere used to make diagnostics about the probable price behavior, find the
triggers (sell price and buy price), and to calculate the stop loss, and the price target, every day since more than a year.

Well now , to develop this work as objective as possible, and get rid of all subjective coming from trader criteria, in order to apply the concepts developed
above, w e use a simple Microsoft Excel model, where w e try to find, in historical data the accomplish of this system objectives.

The population defined for each currency pair under study, could be seen in the follow ing tables:

EURUSD:

CHFUSD:

GBPUSD:

Y ENUSD:

Step 1
Using Metatrader trading platform, V 4.00, we are able to see the currencies prices in real time. This system allow s us to see the different quotation charts
of all majors currencies in Forex and besides, the quotation of NYSE most important stocks, and gold.

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04/07/2009 Part IV: Model's description
This application not only let us see real time quotation, but also keeps historical record of each pair in it’s different time frames.

We proceed to isolate a significant number of records (sessions) in a continuous time serie: date (and hour, in the case of 4 hours sessions) maximum price
of the session (HIGH), minimum price (LOW), opening price (OPEN) and close price (CLOSE or LAST PRICE).
o LAST PRICE).

Ex.: EUR/USD, Dialy

Then we proceed to apply the Zigzag oscillator in the chart, in order to identify the bullish or bearish rallies, their end and duration for each studied session.
In the case of bullish rallies, we take the minimum price of the session (low) as start, and the maximum (high) as the end. This last one, becomes the next
bearish rally beginning.

To explain the graph analysis, w e choose a random set of time for EURUSD quotation, and applied the ZigZag oscillator.

In the following chart of a week session (Chart 4) you can see a bullish rally that starts on 09/03/2003 with a minimum price at 1.0762, that ends on
12/30/2004 at 1.3665 USD dollars against Euro.

Chart 4

To this bullish rally of 2903 basic points, w e apply the ZIGZAG oscillator (red line) showing 3 trend lines:
The first one bullish till 1.2930 day 02/19/2004, second bearish until 1.1759 day 04/26/04 to finally return the bullish trend with it’s third leg.

After isolating the major trend, in this particular case for week sessions, we start analyzing the currency behavior inside it. That’s w hy we apply the ZigZag
oscillator to a 1 day chart (next inferior time frame) in order to find out through charts the minor trends or sub trends, and it’s corrections.

Then we proceed to isolate the first week dominant trend (Chart 5) starting at 1.0762 ending day 02/18/2004 at 1.2930 in the maximum of the session.
When we apply the ZigZag oscillator, w e found out 5 sub trend lines: 3 bullish (A1, A3 and A5), and 2 bearish (B2 and B4).

Chart 5

According to w hat we say before, we can see that A1, A3, and A5 are minor bullish trends that correspond w ith the major one, w hile B2 and B4 are just
price corrections.

Continuing with the model development, we put together the tables for each currency under study, where w e list every price rally, show ing it trend: Bullish
or Bearish and the start and end price. In the particular case of EURUSD, daily session w e came out with the following results.

Table 8

As you can see on table 8 the Number 2 rally, starts on day 05/18/1995 at 1.3380 dollars per Euro, and ends the day 05/26/1995, with a maximum price of
1.4235. This rally last 7 days, or 168 hours and represents 855 basic points.

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal
disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for
you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that
you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the
risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

fxstreet.com/…/2006-06-14.v04.html 2/3
04/07/2009 Part IV: Model's description
Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has
not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.

Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as
general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss
of profit, which may arise directly or indirectly from use of or reliance on such information.

©2009 "FXstreet.com. The Forex Market" All Rights Reserved.

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04/07/2009 Part V: Using Fibonacci to determinat…
Part V: Using Fibonacci to determinate market goals
Tue, Jul 4 2006, 09:33 GMT
by Facundo Molina
MolFX - Management

Step 2
Afterw ards, w e move the following fields-data to a new table: minor rally number, start price, end price, duration (in hours), and the distance in basic points
or pips.

Then, we move the major trend direction to the new table, came up from the application of the Zigzag Oscillator to the major period under study.

After the legs of the ZigZag w ere found (bullish and bearish rallies), we apply the Fibo’s ratios at any leg (“zig” or “zag”) that coincide with the major trend
(In this case, Week), and so, we check if effectively the price retracements will go to the Fibo’s zones, or zones define by this special numbers.

Beginning with the graph example, w here it explains the Zig Zag application, we continue the main analysis with the objective of verify graphically the
behavior of the Fibo’s ratios in the retracements.

Inside the major trend w e isolate in Graph 5, w e proceed to apply the ratios of Fibonacci to the bullish rallies A1, A2, and A3.

In case of Rally A1, we take the complete distance from its minimum price at USD 1.0762, to the end at 1.1862 dollars per Eur. Then, w e apply the Ratios of
Fibonacci trying to see w here the prices go after have reached the peak, and started the retracement.

In case of the bullish rally A1 with 110 basic points, and applying the Fibonacci Retracement ratios, w e calculate the price for any ratio, trying to find the
possible zones w here the quotations could stop, so:

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04/07/2009 Part V: Using Fibonacci to determinat…

Looking at graph 6, and after the price retracement have begun, in opposite direction of the major trend, the price goes to the 23.6% zone. Firstly, the
price couldn’t break this zone, and start to reduce the speed, and begun a change direction turning bull. This change is not considerer by the Zig Zag
Oscillator, because the slope is lower than 12%.

After the price stops, it moves to the 38.2% zone, w here its value is USD 1.1442. According to the results of Zig Zag Oscillator, the quotation stopped in an
intermediate zone between 38.2% and 50%.

Secondly, w e study the Rally A2. This rally begin after the B2 retracement has finished, at USD 1,1375 per Eur, and finishes on 01-12-2004, with a price
value of 1,2900 dollars per Eur (Graph 7).

Besides, we apply again Fibonacci’s retracement ratios, to know the possible quotation behavior,

In this case, w e can see a price retracement with a minimum value at 1.2334 dollars per Eur, near to the Fibo’s ratio, 38.2%. After that, the quotation
rebound, and continues with the dominant trend.

Finally, and following with the bullish trend on Rally A5, the price goes to 1.2930 and change later the dominant trend, as we can see in graph 5. To confirm
a change of the dominant trend, the retracement must be more than a 100% of the last rally, in the present example the price need to break 1,2317.

Continuing with the Statistic Analysis, w e calculate the price values of any currency pair under study. In this example of EURUSD, you can see them in the
next table:

As you can see in Table 13, the Bullish rally number 4 begins at 1.3836 dollars per Eur and ends at 1.4249. We apply the Fibo’s ratios, and we obtain the
corresponding prices. For example, for ratio 23.6% the price is 1.4152 dollars per Eur. In others words, once the quotation rebounds at maximum USD
1.4249 per Eur, should go back to the first target of USD 1.4152.

Step 3
Once the prices targets for any rally were obtained, we proceed to probe the objective success of the system. Previously, w e define 3 scenarios, or zones
around the price, and test the truthfulness of the retracements go to these values or zones.

Each zone was defined with a percentage of the rally distance (zig or zag). For more information, we refer that we select the complete rally of the leg of the
Zig Zag under study, for example: 100 pips, and if the price goes to the zone defined in more or less 7,5% (in this case in more or less 7,5 basic points) of
the Fibonacci’s price, so the propose target is accomplished.

The scenarios are:

- 15% Zone: +/- 7.5% of the total rally, above the Fibo’s price.
- 20% Zone: +/- 10% of the total rally, above the Fibo’s price.
- 25% Zone: +/- 12.5% of the total rally, above the Fibo’s price.

Then, using the logical formula, we try to prove if the retracement of the price will go into the define zone.

In case that the final price of the next rally (mean the retracement), go into the Fibo’s define zone, the logical sequence is True, and so, successful. In the
other hand, is False, and do not achieve the target.

Step 4
Finally, w e proceed to calculate the number of retracements which go to the objective zone inside the dominant trend. In the present example, where w e
analyze the behavior of the currency pair EURUSD, Diary, we obtain the follow ing results for the 15% zone:

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04/07/2009 Part V: Using Fibonacci to determinat…

As we see at table 14, w e obtain a success of more than 70% of the propose objective. We refer that the retracements go to the Fibo’s price zone, w hen
the minor trend correspond to the major. Meanwhile in case that the minor trends have different direction to the Major ones, the Fibo’s ratios have not got
a significant success.

Thank you very much to all readers for continuing the interest till the end. We want to invite you to see the final part w here we offer the investigation
results, and the final conclusion.

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal
disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for
you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that
you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the
risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has
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04/07/2009 Part VI: Using Fibonacci to determinat…
Part VI: Using Fibonacci to determinate market goals
Tue, Jul 4 2006, 15:39 GMT
by Facundo Molina
MolFX - Management

Final Results
Then, and based on the model developed to prove the original hypothesis, we came to the following results:

Pair EUR/USD:

Pair USD/CHF:

Pair GBP/USD:

Pair YEN/USD:

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04/07/2009 Part VI: Using Fibonacci to determinat…

If after finishing this job, someone ask me if it is possible to predict the future, mi answer will still be “NO”. I don’t believe that could be, in fact, I don’t
believe either we can predict what w ill happen in the next minutes…

Although this seems the opposite of the objective of this work, I personally want to remark the difference betw een one thing and the other.

As a technical analyst and according to what was explained above, I maintain technical analysis postulates, and use them w ith statistics and mathematical
tools, to forecast probable target price zones.

And here is the difference: in one hand, you have the certainty, in the other the probability. I personally believe there is no complete certain of what will
happen, but using some specific tools, you can determinate probabilities in a defined scenario.

We use mathematic and statistics tools to analyze hundreds of data in order to prove the objective of this w ork.

That’s why we can affirm than more than 70% of the times, using Fibonacci retracements and ZigZag oscillator, we can determinate the target zones where
prices will go, when they show retracements against major trend.

As a conclusion of this w ork, we propose to you to use Fibonacci tools in intermediate time frames, in order to obtain better results in markets w ith a
defined trend, excluding moments of excessive volatility, but w ith enough price fluctuation, becoming and excellent tool for short term technical traders.

Finally, I want to invite you all to extend the application of this system to smaller time frames, and to the rest of the currencies in FOREX Market, and also,
to other markets, such as futures, options, or any stock market.

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disclaimer.

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you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that
you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the
risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has
not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.

Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as
general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss
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©2009 "FXstreet.com. The Forex Market" All Rights Reserved.

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