Fibonacci found the numbers with his name - I will call them Fib numbers or fibs. They are of the greatest importance when you decide how far a trend will go. You must learn them by heart. I use them every day since 1986. The numbers are 1,2,3, 5, 8, 13, 21, 34, 55 och 89. My extra numbers are 144 and 233 counted in the same way. By taking the first number 1 and add it to the second number 2 you will get 3. To 3 you then add the number before, that is 2 and you get 5 and so on up to 89. 55+34=89. Any price movement I have studied follow the Fib numbers. My studies tell me that it takes about 5 years to get to next Fib number and hold that. The time factor is 5 always.
Example 1: Silver was 1970 at 1 dollar/oz. In 1980 it was at 55 dollar/oz. That means it gained from 1 no less than 8 Fib numbers in 10 years instead of 2. That uptrend was extremely overdone so silver fell back to 3 dollar where it belonged. Now is 2013 and 43 years has gone since silver was at 1 dollar/oz. that means it will take and hold 8 Fib numbers. 43 years divided with 5 equals 8 ( do not count any decimals, take the lowest main number which is 8 instead of 8,6 ). It hit 50 two years ago but could not reach 55. Then it should fall back to test the nearest fib below which is 34 dollar/oz. It broke that resistance and then it will test 21. It has not gotten that low so 21 is holding. From around 23 where it is now I believe it will gain strength and then test 34 again. If broken and holding it will test 55 again.
Example 2: The DOW from 1974 until now. Dow's low then was just above 550. That means 55 or 5 when you count what will happen next. First target is 800. then 1300, 2100, 3400, 5500, 8900, 14400. We are just above that now but we do not know yet if it will hold to go for 23300. Of course it cannot do that so it must hold 14.400 for a long time to get that strength to take 23.300. In 2007 the index could not hold 14.400 t so it fell back to 13000 and broke that so first at 800 it could gain strength and later take back 13000. Dow is now topping out again and first support is 13000 and a break might send it to 800 again. The years between 1974 and 2013 is 39. Divided by 5 it is 7,8 fibs or 7. It started above 500 so the first fib is 800 and the seventh is 14400. It is allowed according to my theory to hold 14.400 or 13.000 which is the same in fib counting but as I said a break below 13000 will most certainly send the Dow to seek support at 8900 or 8000 which are the same in my theory. Why i will explain another time.
My theory is that if you get more than one fib on upside before 5 years it will not make it. A correction will take it back if the time factor is less than 5. This is how time and price comes together according to me and my theory.
You can take any chart long term or short term and you will find that a trend always take one fib. If the time factor on that chart is less than 5 it will not make it long term. Remember my Silver example.
I know this is heavy reading but it is necessary to know by heart any time you trade whatever you trade. Never forget that price and time must correlate.
When you understand this you can easily see how high the price of your house or apartment will go. Is it overextended and will correct on downside or is it in line with the time factor. I have studied the price of my house in Sweden since it was built in 1946 and sold at SEK 11.000. Today the price has been 5.500.000 SEK for a couple of years. From 1980 to 2006 it rose from 500.000 to 5.500.000 which is - see the fib numbers above - an increase of 5 fibs. 8,13,21,34 55. This is 26 years divided by 5 which is 5. This price level could hold but next fib price is a whopping 8.900.000. Will that happen in five years. It could but now it seems unlikely.
Finally today just a few words about the price of oil. It has been up to 21 many years ago several times but a few years ago it rallied in a short time to 144. A correction came of course down to 34, one fib above 21 and we are now trying to hold 89 or 80 again. You name the stuff and you count what will happen in the future. This is another way too look into the future which this blog is all about.
Summary: There are only these numbers in reality in the fib numbers. 1,2,3,5 and 8. That is all you need plus the time factor 5. To get from a price at 1 to 8 which is 4 fibs the time must be 20 (4x5=20). When you are trained in my theory you look at these numbers every where. When I traded the SP500 last Thursday the price traded between 1.577.34 - 1.592.10. I choose 77 to 92 to follow from these two prices. The sell button showed the whole price so I concentrated on the last two dollar numbers before the decimals The fibs are 80-89 in this case.. Should 80 hold on downside and could we get above 89 was in my brain when trading. After a while a saw when the trend moved up and down that a sell above 89 is good and a buy below 80 is good. So I sold at 1.591.80 and the close came in at 1.583.34.
Example 1: Silver was 1970 at 1 dollar/oz. In 1980 it was at 55 dollar/oz. That means it gained from 1 no less than 8 Fib numbers in 10 years instead of 2. That uptrend was extremely overdone so silver fell back to 3 dollar where it belonged. Now is 2013 and 43 years has gone since silver was at 1 dollar/oz. that means it will take and hold 8 Fib numbers. 43 years divided with 5 equals 8 ( do not count any decimals, take the lowest main number which is 8 instead of 8,6 ). It hit 50 two years ago but could not reach 55. Then it should fall back to test the nearest fib below which is 34 dollar/oz. It broke that resistance and then it will test 21. It has not gotten that low so 21 is holding. From around 23 where it is now I believe it will gain strength and then test 34 again. If broken and holding it will test 55 again.
Example 2: The DOW from 1974 until now. Dow's low then was just above 550. That means 55 or 5 when you count what will happen next. First target is 800. then 1300, 2100, 3400, 5500, 8900, 14400. We are just above that now but we do not know yet if it will hold to go for 23300. Of course it cannot do that so it must hold 14.400 for a long time to get that strength to take 23.300. In 2007 the index could not hold 14.400 t so it fell back to 13000 and broke that so first at 800 it could gain strength and later take back 13000. Dow is now topping out again and first support is 13000 and a break might send it to 800 again. The years between 1974 and 2013 is 39. Divided by 5 it is 7,8 fibs or 7. It started above 500 so the first fib is 800 and the seventh is 14400. It is allowed according to my theory to hold 14.400 or 13.000 which is the same in fib counting but as I said a break below 13000 will most certainly send the Dow to seek support at 8900 or 8000 which are the same in my theory. Why i will explain another time.
My theory is that if you get more than one fib on upside before 5 years it will not make it. A correction will take it back if the time factor is less than 5. This is how time and price comes together according to me and my theory.
You can take any chart long term or short term and you will find that a trend always take one fib. If the time factor on that chart is less than 5 it will not make it long term. Remember my Silver example.
I know this is heavy reading but it is necessary to know by heart any time you trade whatever you trade. Never forget that price and time must correlate.
When you understand this you can easily see how high the price of your house or apartment will go. Is it overextended and will correct on downside or is it in line with the time factor. I have studied the price of my house in Sweden since it was built in 1946 and sold at SEK 11.000. Today the price has been 5.500.000 SEK for a couple of years. From 1980 to 2006 it rose from 500.000 to 5.500.000 which is - see the fib numbers above - an increase of 5 fibs. 8,13,21,34 55. This is 26 years divided by 5 which is 5. This price level could hold but next fib price is a whopping 8.900.000. Will that happen in five years. It could but now it seems unlikely.
Finally today just a few words about the price of oil. It has been up to 21 many years ago several times but a few years ago it rallied in a short time to 144. A correction came of course down to 34, one fib above 21 and we are now trying to hold 89 or 80 again. You name the stuff and you count what will happen in the future. This is another way too look into the future which this blog is all about.
Summary: There are only these numbers in reality in the fib numbers. 1,2,3,5 and 8. That is all you need plus the time factor 5. To get from a price at 1 to 8 which is 4 fibs the time must be 20 (4x5=20). When you are trained in my theory you look at these numbers every where. When I traded the SP500 last Thursday the price traded between 1.577.34 - 1.592.10. I choose 77 to 92 to follow from these two prices. The sell button showed the whole price so I concentrated on the last two dollar numbers before the decimals The fibs are 80-89 in this case.. Should 80 hold on downside and could we get above 89 was in my brain when trading. After a while a saw when the trend moved up and down that a sell above 89 is good and a buy below 80 is good. So I sold at 1.591.80 and the close came in at 1.583.34.
No comments:
Post a Comment