[J14585805,Y]&listNum=4
The data below are drawn from the above chart.
Move length measurements are from the “major” highest high of a move to the next “major” lowest low or vice versa. (Some minor peaks or valleys of a few days duration may occur between these.) These length measurements are used to confirm that the following maximum or minimum occurs at multiple of the measurement times a Fibo ratio.
Six movements can be seen in the above data and are indicated by a series of horizontal lines at the Fibo ratios with colors yellow, cyan, black, green, blue, and red.
This is the data with calculations:
YELLOW:
Lowest Low (LL): 765.63 10/10/02
Highest High (HH): 925.66 11/6/02
Difference (Delta): 157.03
38.2% of difference = 60
Predicted following low= HH - .382*Delta = 865.66
Following Low: 872.05 11/13/02
Error = 6.39 pts. = 4.07%
CYAN:
Highest High (HH): 941.82 11/29/02
Lowest Low (LL): 869.45 12/31/02
Difference (Delta): 72.37
100% of difference = 72.37
Predicted following high= HH = 941.82
Following High: 935.05 1/13/03
Error = 6.77 pts. = 9.35%
BLACK:
Highest High (HH): 935.05 1/13/03
Lowest Low (LL): 806.29 2/13/03
Difference (Delta): 128.76
38.2% of difference = 49.19
Predicted following high= LL + .382*Delta = 855.47
Following Low: 852.28 2/21/03
Error = 3.19 pts. = 3.96%
GREEN:
Lowest Low (LL): 788.90 3/12/03
Highest High (HH): 895.89 3/21/03
Difference (Delta): 106.99
38.2% of difference = 40.87
Predicted following low= HH - .382*Delta = 855.02
Following Low: 843.68 3/31/03
Error = 11.34 pts. = 10.59%
BLUE:
Lowest Low (LL): 843.68 3/31/03
Highest High (HH): 949.65 5/16/03
Difference (Delta): 105.97
38.2% of difference = 40.48
Predicted following high= HH - .382*Delta = 909.17
Following Low: 912.05 5/20/03
Error = 2.88 pts. = 2.72%
RED:
Lowest Low (LL): 912.06 5/20/03
Highest High (HH): 1015.33 6/17/03
Difference (Delta): 103.27
38.2% of difference = 39.45
Predicted following low= HH - .382*Delta = 975.88
Following Low: 973.80 6/26/03
Error = 2.08 pts. = 2.01%
The average percentage difference of the predicted price turning point (computed as 100*(price-nearest Fib)/(HH-LL) ) is 5.45%.
The Fib levels are at 0%, 38.2%, 50%, 61.8%, and 100%. Assuming the possible price turning points across the range (HH-LL) follow a uniform distribution, we get the following results if the turning points have a random distribution:
A point falling between 0% and 38.2% can fall a minimum of 0% from a Fib and a maximum of 19.1%, for an average difference of 9.5%.
A point falling between 38.2% and 50% can fall a minimum of 0% from a Fib and a maximum of 5.9%, for an average difference of 2.95%%.
A point falling between 50% and 61.8% can fall a minimum of 0% from a Fib and a maximum of 5.9%, for an average difference of 2.95%%.
A point falling between 61.8% and 100% can fall a minimum of 0% from a Fib and a maximum of 19.2%, for an average difference of 9.5%.
The average if the price turning points are just chance is 6.22%. Close to what is actually seen.
Snake oil.
AND I will admit that a study only 10 consecutive months long and with only six samples is too little to really settle matters. I have seen myself apparent good correlations that long or longer that later failed. But at this point, I'd say it's the one to beat.
Let me know of other flaws you see.
