Targets and Stops (003) – Fibonacci projections

Another important and broadly used target calculation tool is what market technicians call the Fibonacci projections.
Simply putting the Fibonacci ratios are used to project the end of a three legged structure after two legs are considered complete. These three legs could be a-b-c, 1-2-3, 3-4-5 or w-x-y.
These following Fibonacci ratios or projections: 0.382 (38.2%), 0.50 (50%), 0.618(61.8%), 1(100%), 1.382 (138%), 1.618(161.8%) or 2.618 (261.8%) can be applied by your local charting tool. We at Orpheus find the 0.618(61.8%), 1(100%), 1.618(161.8%) proportions very regular.
Fibonacci projections are often used in combination with other target calculation techniques to give a more precise target. The more the number of targets bunched together in a confluence the more accurate the projection, target or likely reversal.

We have illustrated this technique on an idealised price structure and Indian Industrials major L&T. We have projected the end of the C wave from the B wave low. As you can see on the chart above, the Fibonacci projections highlight key 1,950 and 2,050 levels as important Fib targets and potential reversal areas.
Orpheus Store
Orpheus Research at Reuters – United Kingdom
Orpheus Research at Reuters – United States