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TOPIC: EWT and Fibs

EWT and Fibs - Jackozy/Anyone 19 Nov 2012 14:06 #1

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Hi Wreckless Eric and thanks for your kind words.

Like diver, I'm not exactly sure what you're asking, but here's a possible wave count for the entire correction from the Feb 2011 high, culminating with the 61.8% Fib as diver pointed out:

BGweeklywavecount19_11_12.gif


dl.dropbox.com/u/20815047/BGweeklywavecount19_11_12.gif
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EWT and Fibs 19 Nov 2012 13:15 #2

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Here's a follow-up to the earlier piece on the USDJPY live example for the EWT/Fib theory.

Remember, we were looking at a 161.8% Fib extension target for wave 3 up at 80.85 but we knew there was firm resistance at 80.62 which would probably come into play. We were then looking at a possible retrace to the wave 1 high at 79.22 for the wave 4 retrace before continuing up to test the 81.78 reistance for wave 5. Here's what happened:

USDJPYdaily19_11_12a.gif


dl.dropbox.com/u/20815047/USDJPYdaily19_11_12a.gif

As we can see, that resistance came into play perfectly with a bearish RSI divergence too so this was a good place to go short. The wave 4 down turned out to be slightly anomalous though:

USDJPYdaily19_11_12b.gif


dl.dropbox.com/u/20815047/USDJPYdaily19_11_12b.gif

We were looking to the 38.2% Fib or the top of wave 1 to act as support. In fact it retraced to precisely the 50% Fib which entered wave 1 territory. We'll return to this apparent break of EWT rules later. Having bounced off the 50% retracement of wave 3, it began a very swift wave 5 up. Our target for this was between the wave 5 = wave 1 level of 81.157 and the natural resistance at 81.78 and that's what happened:

USDJPYdaily19_11_12.gif

dl.dropbox.com/u/20815047/USDJPYdaily19_11_12.gif

It's a little dangerous to assume that the top has formed here as it's too early to tell but the current peak does fit well with theory. There also appears to be another bearish RSI divergence forming between the wave 3 and 5 peaks, just as we'd expect (the earlier bearish RSI divergence at 80.62 often occurs between the 3rd and 5th subwaves of wave 3). However, we still have the unresolved matter of the wave 1/4 overlap to consider...

USDJPYdaily19_11_12c.gif


dl.dropbox.com/u/20815047/USDJPYdaily19_11_12c.gif

In fact, EWT does allow for a wave 1/4 overlap in the event of a diagonal triangle. These can be either a leading diagonal wave 1 (as this would be) or an ending diagonal wave 5. In both cases they represent weak impulse waves and are usually followed by strong retraces to at least the 61.8% level and sometimes a full retrace.

As we can see from the above chart, it's possible that USDJPY has formed a leading diagonal triangle with an overshoot for the 5th subwave of it. Elliott did note that the 5th subwave of all triangle formations can often overshoot and extend beyond the triangle boundary so the fact the this happened here does not rule out the leading diagonal possibility. Further, the bearish nature of both the wave 2 and wave 4 retraces suggest that the whole move has a bearish quality about it so perhaps this is not a surprise.

The other possibility, of course, is that the wave count here is wrong and that an alternative may need to play out. Time will tell, but for now this live example has apparently conformed quite well to EWT and Fib theory. From a practical point of view, when the theory has been adjusted to account for nearby natural supports and resistances it's provided a very good trading opportunity and, let's face it, that's really our primary concern here and we will continue to monitor this FX pair as it plays out.
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EWT and Fibs - Jackozy/Anyone 18 Nov 2012 09:27 #3

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screencast.com/t/7jeFHq7sM1LY



I'm not at all sure what it is you're asking here but the above chart and link should adequately demonstrate the liking this share has for the 61fib. An turn around is imminent IMHO.

As far as the EW count is concerned we may well be in a wave 3; possibly at the end of (ii) of 3: time will tell.

That's just my interpretation and I could well be very wrong so probably best wait for Jackozy ;)
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EWT and Fibs - Jackozy/Anyone 18 Nov 2012 04:50 #4

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Very interesting discussion/thread.

I have a question for Jackozy/anyone, presumably a topping out formation can interfere with a EWT descending count? Should the wave count start after the completion of the topping out (end of sideways or non-trending move), and should the Fib calcs be from the first top or second top?

Really sorry, but no chart today (never very accurate/accessible anyway), but looking at BG, monthly chart there is a strong long-term 5 wave count from January 2003 (234p) to March 2011 (1551p) and what appears to be a slanting double top February 2012 (1517p) before the current decline to (1000p).

With another -14% odd to meet the upward trend on Friday (854p - rising daily), a bit further to fall maybe to meet the 50% retrace of the rise to 1551p (893p), a 61.8% retrace of the rise to 1551p would be 737p odd.

Perhaps on a more accurate chart than I could draw could someone show Fibs from 1551p and 1517p.

Also wave count down ABC or inverted 1-5? and how can one tell which one could occur?
What would be you correction wave count for BG?

Thankyou for the posts here, excellent.

(BG on my watchlist)
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EWT and Fibs 30 Oct 2012 15:55 #5

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Wow, Jackozy that was about as text book as it gets so far. Great explanation of a tricky subject. I will continue to observe in anticipation of the next move B)
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EWT and Fibs 30 Oct 2012 15:32 #6

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Here we're going to look at a live example of this theory in action. Prices almost never perform precisely to TA theory so please view this post as educational rather than a trading tip.

USDJPY had been in a downtrend which ended at a known uptrend support with a bullish RSI divergence. We've seen an initial rise and retrace so we can see how the theory matched up:


USDJPYexample1.gif


dl.dropbox.com/u/20815047/USDJPYexample1.gif

We can see it dropped to the 78.6% Fib so we plot the Fib extensions from there to give us resistances on the way up to a wave 3 target:


USDJPYexample2.gif


dl.dropbox.com/u/20815047/USDJPYexample2.gif

We have not (so far) reached that target so the rest is theoretical. The wave 3 target from the Fib extensions comes in very close to a known, strong resistance level so it seems a good place to trade from. We can then theorise as to how the rest of the waves could look:


USDJPYexample3.gif


dl.dropbox.com/u/20815047/USDJPYexample3.gif

And then on to a possible 5th wave move:


USDJPYexample4.gif


dl.dropbox.com/u/20815047/USDJPYexample4.gif

Note again how a wave 5 equal to wave 1 target coincides with a natural, known resistance. We can even look at the subwaves of wave 3 we we appear to still be in:


USDJPYexample5.gif


dl.dropbox.com/u/20815047/USDJPYexample5.gif

We can see that so far it's performing very nicely according to theory but we should never assume that this will continue.

Good luck!
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EWT and Fibs 29 Oct 2012 14:58 #7

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KI,

Thank you very much for a very thoughtful answer. I appreciate your candour.

I think I'll run some paper trades based on your Fib technique to check it out for myself. I'm not doubting your word, but I'm sure you'd agree we should all crash test any method before putting it into practice. I'd certainly be happy to replicate your track record!

Of course, one could argue that TA only works really well if you're trading the same levels as the big money so if that's what the foreign banks are using to trade FX then it hardly matters if it's technically "correct" or not - all that matters is which levels the money flows at.

I note that using your technique, a fall back to the 100% level (which I also use) coincides with natural (and EWT) support at the wave 1 peak so I can see that that makes sense.

Re the 23/76/78 Fibs - if you're using the 76.4% and the 23.6% then there is no difference mathematically at all. I do agree, however, that in FX accuracy is more important due to the volatility and margin involved.

It's good to have discussion about new/different techniques - that's the whole point in this site and forum I guess - so thanks again for sharing your views.
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EWT and Fibs 29 Oct 2012 14:38 #8

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Hi Jackozy.

I will try and answer your questions in order

1) The way i trade fibbo`s comes from foreign banks fx traders, i was taught how to trade the fibbo`s this way a few years back (i am still learning to this day)

2)Yes you could argue that from a mathematical point of view the 23 and the 78 are the only changes. but this is important, the 23.6 (or as some use 76.4)are big players when it comes to reversals. Look at many daily charts and you will see this time and time again.

3)It is important to have a bullish and a bearish fib on your charts in different colours, they will both come from different levels so will give you a more balanced view on any likely moves.

4) the last time i had results of my trades checked, i called 30 out of 31 correct (all trades where done live and had open, S/L and target) now the interesting thing is the S/L i called was mainly 10pts with some at 15, so as you would expect the R/R was very good.So yes the results are consistant.

To add to the above, i look for wave 3 to hit 161 wave 4 to return back to 100 and bounce and wave 5 to hit 261 (at the 261 watch for a fake move up after a daily range forms, its a bull trap). I will add to pullbacks, take 50% proffit around the 161 mark on the way up. Of course as we know it never always goes to plan, hence why i urge folk to keep an eye on the 4 hour.

Finaly, spend some time plotting your fibbs the way i have suggested (historicaly)and look at how consistant it is. All the best KI.

Forgot to say, the 2 main areas to look for in fib failures are bottom of wave 4 at the 100% and midway between 161 and 261 on wave 4-5.
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EWT and Fibs 29 Oct 2012 12:43 #9

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Hi KI and thanks for your kind words.

You have an interesting view if not a conventional one! I wonder whether it was borne of theory or experience?

From a mathematical point of view, drawing the Fibs your way round really only changes the 23.6% and 78.6% Fibs since the 38.2% and 61.8% are effectively inverses of each other (in that 100-61.8 = 38.2 so that it doesn't matter which way round you draw them those lines will still be in the same place just with different labels). The more extreme levels of 23.6% and 78.6% come into play less often and, inverted, are not too far apart.

For me, the point in using them in what you refer to as a bearish manner is that after a rise I am looking for a retracement so, logically, it makes sense to plot retracement Fibs. For the upside projections, you would get completely different levels for resistance using your bull Fib method since you're not projecting them from the low point formed by the retrace from the initial rise.

An example we can look at the Dow:


INDUFibs.gif



dl.dropbox.com/u/20815047/INDUFibs.gif

Here, your method is drawn in red Fibs plotting from the top down on what may be considered to be a wave 1 of some degree or other. The blue Fibs are Fib extensions plotted using the wave 1 low and high and projected from the wave 2 low. As you can see, they forecast quite different levels of resistance but they both have the %age levels increasing with price. In this case we can see that the 161.8% Fib target (normal wave 3 target) using the latter method appears to have been more accurate, hence my original question: does your method provide more consistent results in practice?

I'd be interested on your comments. Thanks.
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EWT and Fibs 29 Oct 2012 11:43 #10

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Jackozy, that post is worth the yearly subscription on its own.

Now so far i have been playing Devil`s Advocate in asking questions on fibbo`s. However when it comes to fibbo`s i like to think i am not to bad.

You boys have shown great courtesy with your patience and answers, so lets see if i can add value to your trading.

Firstly i think you should review your starting point when placing your fibbs and also you seem to start with a bearish fib on a bull forecast.

Place your 100% at the top of wave 1 pulling it back so 0% sits at the bottom of wave 1.
You have now placed a bull fib on a potential bull run.

Now 23.6 becomes the extreme pullback (i tend to start going long from 61.8 then adding at 50, 38 and 23. The thing that you should have noticed is that you have now forecasted its potential entire run without having to move your fibbs.

For your entry point you need to change from daily to 4 hour and look for consolidation, price action or outright rejection (dont trade smaller than 4 hour)

When trading daily, keep checking the 4hour, making sure you get HH and HL if going long and visa versa if short. There are other bits for me to add, but hopefully this is the start.

Once again thanks for your time. KI.
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EWT and Fibs 29 Oct 2012 10:35 #11

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Hi KI
Just read jackozy great post as that should help in understanding the fibs with regards to Elliots.
The dow chart ive done is assuming were in wave 3 still so that projection is for the wave 3.
Elliot can get real tricky so bear that in mind as there always an alternative count.
Just remember that the projection is assuming we are in wave 3 and nothing else. So that could all be wrong if we go below the level 2.
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EWT and Fibs 29 Oct 2012 09:07 #12

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MRA4 wrote:
Ki, you can see where the next Resistances or supports are by using the Fib Extensions, the dow video bit towards the end shows where the next resitances will be eg. 14000 & 17000 at the 161.8% fib extension.
Remo

Morning Remo, i have had another look at your video, mainly the end part of the dow chart. You seem to draw from the bottom (not numbered, but assume its zero) up to top of wave 5 then down to large no 2, then you show your fibbo.

The bit that throws me is that this fibbo then shows 61% at circa 14500 and 100% at circa 17000. My questions are....1) are the fibbo`s in the right place. And 2) if you feel they are correct are you expecting the dow to hit 17000 anytime soon.Thanks for your patience. KI.
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EWT and Fibs 28 Oct 2012 22:12 #13

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Hi, i've posted this months ago on CV and probably most of you already have it but reposting here will make it available for all new members who wants to learn about EWT

Elliot wave
www.acrotec.com/ebooks/elliottwave_en.pdf

Fibonacci trading
www.acrotec.com/ebooks/fibonacci_en.pdf
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EWT and Fibs 28 Oct 2012 20:59 #14

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Got to go, will look again in the morning, but thanks anyway remo.
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EWT and Fibs 28 Oct 2012 20:47 #15

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The normal way of doing the fibs assumes that the price does not go lower than the area you took the fib reading from. If it does go lower then you have to redo your fib calculations. thats why it should be used from a known high and a known low a bit like the 123 low or 123 high.

back to my beer
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EWT and Fibs 28 Oct 2012 20:41 #16

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KI
i dont think i answered your question....dohhhh
Its not really used to forecast but it can with Elliotts waves.
example.
wave 1 moved 100 points then wave 2 retraced 40 points so now you now know roughly that wave 3 will move equal to 100 points from the bottom of wave 2 so go to 160 at least the minimum.(100% full fib extensions)assuming that wave 5 is going to be smaller as wave 3 cannot be the smallest.
so again its down to your style of trading.

its definately not looking to confirm where a price has been.
remember in the video i talk about hindsite trading in the beginning.
Fib extensions are not hindsite trading. Its used to determin resistance and supports level conventionally

i hope that makes sense
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EWT and Fibs 28 Oct 2012 20:38 #17

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Had a look a few times, i dont seem to understand whats being said. I thought a fibbo was drawn from the top and a bottom of a range....0-100 with the fibbo extension 161.8 and 261.8 as the next targets. Any chance someone can take a screen shot and point out what i am not seeing. Soz for being a bit thick about this. TIA. KI.
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EWT and Fibs 28 Oct 2012 20:33 #18

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Hi KI
Not being a nuisance mate. Thats what these forums are meant for.

you can trade of it.
The way i do it is when it approaches a key fib level i would ether short it or go long depending on where the fib was taken from.
So for me the best area is always the 61.8 fib level but the way i trade it is different from others. I always will trade the first attempt of that fib level during market hours only if it coincides with another level of support or resistance.
It could also be used to take profits from.
If you look at that video i did carefully then look at the 61.8 area on each of the fibs extensions. It seems to struggle there. It really depends on your style of trading.
My style is if the trend is up then any retracements towards a key fib will be a level to add new longs. i always use stops and generally take profits real quickly(pay myself)
Thats the same reason i had the other day with regards to the dow. The trend is clearly up so i always go long on key areas. Until that area is broken then why go against the prevailing trend.
sorry slightly diverging
but i hope that makes sense
Its all down to your own style of trading.
I generally go against the norm.
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EWT and Fibs 28 Oct 2012 20:05 #19

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Ki, you can see where the next Resistances or supports are by using the Fib Extensions, the dow video bit towards the end shows where the next resitances will be eg. 14000 & 17000 at the 161.8% fib extension.
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EWT and Fibs 28 Oct 2012 19:32 #20

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OK thanks remo. So could or would you be able to use the fibbo to forecast future prices or are we only looking to confirm where a price has been. Sorry to be a nuisance but i would like to try and understand this fibbo trading. All help appreciated. KI.
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EWT and Fibs 28 Oct 2012 19:24 #21

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hi KI

This video was to show how to use fib extensions not the entry method.
by showing the video people can see how roughly to use the extensions. Lots of people dont know how its done so hence the video.
Fibs should incorporate the extremes and not in-between .
The idea of the fib extensions is to see where the supports and resistance will be so you should be able to work out where to exit or enter.
It also depends on what method you use.
So basically im just showing how a fib is plotted and thats it really.
You need to have a method in play before you use the fib extensions.

hope that makes sense
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EWT and Fibs 28 Oct 2012 18:57 #22

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Remo, if i may ask, why when you set your fibbo`s do you ignore the initial HH and the first LL. It looks like you have no entry point except for a load of fibbo no`s on this video. Also the fib extension although visual are not promoted as targets.

This is just an observation on my part. KI.
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EWT and Fibs 28 Oct 2012 11:07 #23

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Jackozy not jogozy, sorry finger trouble!!
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EWT and Fibs 28 Oct 2012 11:04 #24

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Your Video is brilliant & explains everything so clearly, Thanks! With your examples & jogozy’s, myself & others on chartsview can clearly see the importance of using Fib Extensions, I can now apply this method to help understand things more clearly, along with other technical methods this will be useful.
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EWT and Fibs 27 Oct 2012 18:55 #25

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[][/video]
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EWT and Fibs 27 Oct 2012 16:46 #26

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MRA4

simple answer to your question is..
Nothing like it.

If you look on the learning tab under Type of charts then point and figure charts
I actually attempt to explain how to do point and figure targets.
hope that helps.
with regards to the fib extensions. Theres different ways to do this. using elliots or conventional???
Conventional is done by taking a low to a high then projecting the fib from the pull back.

Ill do a quick video for you latter on GKP.
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Last Edit: 27 Oct 2012 18:54 by remo.
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EWT and Fibs 27 Oct 2012 15:55 #27

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oh..My chart got in the way of my question i have,
Question is, is the target you get by doing a fib extensions anything like a Point & figure target????
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EWT and Fibs 27 Oct 2012 15:51 #28

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Much appreciated for explaining Jackozy & Remo, to be honest i have found this a hard one to figure out??? :lol:
how you do this in the real world was not easy for me :woohoo: & I had a go myself, for the example on GKP, i did it by clicking on the fib extension icon on the weekly chart, then 4.5p & extended this to 202.75 then back down to 87p which gave the result of 161.8% extension 410ish, see my chart a did :)
picasaweb.google.com/1134289376813146303.../5803993404750169970

I think maybe a short video would help everyone, i'd have a go myself, but don't know how to do one & would need a step by step video to know how to do this too!!
did get there in the end, anyone else have a go at fib Extensions?? Question is, is the target you get by
GKPFIB_Extension.jpg

doing fib extensions anything like a Point & figure target????
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EWT and Fibs 26 Oct 2012 10:58 #29

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Lol! Yes, remo - bottom of wave 1 to top of wave 1 and then projected from bottom of wave 2. Different chart packages draw extensions in different ways though so each member will need to check how their own chart package works.

You can work them out manually using the following formula:

(1.618 x (wave 1 top - wave 1 bottom)) + wave 2 bottom = wave 3 high projection
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EWT and Fibs 26 Oct 2012 10:41 #30

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I take it the fib was taken from wave 1 and then put at the bottom of wave 2 to get your target for wave 3.
im sure thats what your on about.Some people may not understand that part.
Only reason i say this is because i had to look a second time. And i understand this...lol
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EWT and Fibs 26 Oct 2012 10:33 #31

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EWT and Fibs 25 Oct 2012 13:51 #32

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Hi MRA4. Here's a recent (sort of) obvious example:

dl.dropbox.com/u/20815047/GKPweekly25_10_12.gif

161.8% extension of 4.5p to 202.75p projected from 87p gave 410 ish. Funny thing is, though, the retrace from there means that it can't have been a wave 3 of same degree as the 2 primary waves which generated it since it's retraced into wave 1 territory (unless it's a very strange leading expanding diagonal triangle!). We weren't to know that at the time though!

I haven't forgotten I'm due a follow up to my earlier post - got to earna few £s too! :cheer:
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EWT and Fibs 25 Oct 2012 12:22 #33

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I would really be interested to see an example of the fib Expansion used in real life, eg. on the dow or on a share,eg. the inverse 1.618 (common Fib expansion target for a wave 3),just so Myself & everyone can see & understand how this is works out, where do you take the fib from eg. is it taken from wave1 that gives you the 1.61 expansion for the end of a wave 3?
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EWT and Fibs 23 Oct 2012 09:49 #34

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Cheers Jackozy,

That is the clearest i have ever seen it explained.

RMc
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