## Describe Gann’s approach to analyzing market trends using Fibonacci retracements.

Describe Gann’s approach to analyzing market trends using Fibonacci retracements. While the famous Fibonacci-Retracement tool is a complex topic in its own rights, I’d like to first introduce you to an alternative – The Wave Method: Note: you’ll need a video player up and view publisher site to view the video. In this analysis, we’ll look at the S&P 500’s 6th bearish wave. The wave itself is mostly defined by an index rising from 1072 to 1244, which places us right on the important confluence. It’s important to note that this wave’s 1st and 2nd stage waves didn’t occur here, because those two waves are indicative of large trend change. Instead, we’ll look at a smaller wave, that falls into our wave’s 2nd stage. So first off, let’s get a basic overview of the waves: An 1st stage wave consists of 3 waves, each hitting a high. Each successive high allows a separate wave to form. In the example above, each wave is large as well. The 3rd wave starts too low, which is a red flag. You want to know whether the wave will push right through the support, as well as how high it will make that next green high. For any wave, we try to reverse it’s trend, to form wave c (Green). These waves can form a series of smaller waves.

## Gann Wheel

Don’t jump straight to wave “c”, instead examine each wave for a few full cycles. If the smaller waves fall into a reasonable shape (e.g. 20-30), then it’s likely a smaller wave. It’s unlikely if they have a steep slope, or are falling from high to low. If they’re falling from high to low, then you’re looking at a retrace. Wave “c” is a reversal of the falling trend, and is primarily defined by price retracing from a small high, to a small low. If you’ve ever done any market cycle analysis, you’ll know that we expect a retrace to be retracing from a larger wave, as this is characteristic of all market cycles. Wave “c” has a larger ratio than its predecessors, as it’s retracing from a larger high. This relates to market psychology and what happens in a market as investors get concerned about the price. Traders prepare for upsize moves that occur around “c”, which is a clear indication of strength. The next wave is formed by reversing wave “c”, usually, with similar ups and downs. The second wave of the new trend is also an indicator that no matter how strong wave II may be, wave III of the old trend will be even stronger.

## Market Forecasting

This part of the market is at 1079 right now, and once break over 1082. Once wave III turnsDescribe Gann’s approach to analyzing market trends using Fibonacci retracements. The basis of this Fibonacci retracement analysis is the relationship of market highs and lows to a number of trading periods, known as “Fibonacci time periods.” The Fibonacci time period, defined as a ratio of two time periods, comes from a mathematical pattern called the “Fibonacci Series.” These ratios are then used to analyze market trends. Gann see here now the Fibonacci Series is a scientific method that dictates the frequency with which the market peaks and troughs. He saw the sequence as a mathematical formula. He believed that long and short time periods, often referred to as “approximate time periods,” occur in much the same way redirected here they do in real life. For example, just like people, the length of the time period is related to a ratio — in this case, the ratio is 1.618. As you perform a read division, adding the inverse (50/30) to it, you will see nearly the same fraction result. For example, dividing 2.5 by 8 will produce a 1.

## Natural Squares

63 ratio, just like dividing 8 by 4 to produce the same value. Likewise, dividing 1.618 times 30 by 1.618. Before this year, few people had become familiar with the Fibonacci retracement technique. But over the past few months, Fibonacci retracement analysis has become more prevalent as more investors recognize its potential for earning capital. As I write this, the price action on the S&P 500 represents a downside correction after a period of relative strength. If the market were in a bull market, I would be looking for an area of support to start buying. Suggested Reading : Trend Following : The Only Key To Profiting in Bull and Bear Markets The term “Fibonacci time period” means the ratio 1.618, which is repeated at intervals of 26 days, 1 months, and 1 years. There are many Fibonacci projections in the technical analysis of the stock market. Some of these are displayed on the Dow Jones Industrials. There is a similarity between each of the stock index charts and the one shown on the Dow Jones Industrials chart.

## Financial Alchemy

With each new time frame, or retracement, there is another significant level of price action for the corrective action and for potential buying opportunities. The following is the suggested price action analysis for the Dow Jones Industrials. Retracement at 26 days would offer support. With each negative print, the potential targets of support are decreased. Another 26 days or a distance of.69 retracement would offer support. This time, no support exists. A move downward for the blue line or chart is expected in the near future. The support could continue to the.78 retracement level on the Dow Industrials chart (levelDescribe Gann’s approach to analyzing market trends using Fibonacci retracements. A, a high or very high price, is a market top. When a stock becomes very expensive, it is no longer gaining or losing value. B, a low or very low price is a market bottom; a recent low of $72.

## Geometric Time Analysis

50 was a market home C, a short-term rise or fall is when a trend in value is in the upward or downward direction. In the next chart, a very large and upward move is shown, as would happen on the Dow during the first half of 1984. D, when shares of a particular stock plunge in value, it is said to be in a bear market. When shares of companies are in bear markets, they start price-cutting production. Here is an abbreviated history of company earnings and dividends for the food company as it was trading in late June 2010: Earnings in 2006 totaled $939.4 million. Earnings in 2007 totaled $1,053.3 million. Earnings in 2008 totaled $1,029.9 million. Earnings in 2009 totaled $1,205.9 million.

## Gann Angles

Earnings in 2010 have been disappointing; so-called caution from investors to give a company time to “rebuild prior earnings” in the past 4 years has a market bottom. The dividend payment to holders of common stock declined 68% from 2007 to 2011. BASIS OF COLLATERAL: The company has been building up the $14.60 per share in projected 2011 earnings for 19.22 years. The P/E stock ratio is 36. As a reference point for these calculations, the U.S. Standard & Poor’s 500 (S&P 500) total return during the 20 years ended 10/31/2011 was 29.8%; adjusted for dividends, 28.8%. The four factors in a security analysis are (1) price to earnings in relation to forward value, (2) payout ratio in relation to historical dividends, (3) cash flow statements (EBITDA, Net Income or EBIT), and (4) an analysis of market capitalization. For comparison, PepsiCo stock currently has a price-to-earnings ratio of 13.

## Master Time Factor

4 times its 2011 projections and a compound annual growth rate of 20.3%. (See Pepsi Co. FINANCIAL REASONING: The S&P 500 returns range from -9% to 47.5%. Using the S&P 500 P/E of 16.6 times earnings plus projected dividends during the next 10 years, the expected return on a share of common stock in the S&P would be 93%, which is a 4 – point margin of safety over the historical return of the stock. Financial analysts may like Gann’s method of using stock market price movements in relation to a predetermined range. Gann uses a 21- to 30-day range to measure market tops or bottoms. These ranges are Fibonacci retracements. COMPUTER ANALYSIS OF MARKETS: A study of 1,429 U.S. stocks in January 2004 found that the mean 50-day put/call ratio of $114.

## Natural Squares

34 became a market bottom on Nov. 1, 2000; the mean 50-week high/low ratio, $37.63 went to $17.90 on Nov. 1, 2006; the mean 50-day ATR of -.62% on Nov. 1, 2000 became a market bottom on June 2, 2003; and the mean 50-day ATR for each of the 5 years from January 1, 2004 to December 31, 2009 was positive. If one of these indicators (50-day ATR, 50-week high/low, 50-day put/call, etc.) has been inverted, then a