Dan,
Very nice post yourself Dan!!
You ask "Why not look at the roots of the primary ratios as a source of additional ratios of interest?" I'm still trying to answer the question why look for Fibo numbers, or any others, in the first place? The business of using powers and roots in TA seems based more on the notion that there is something magical about powers and roots rather than an actual theory with some foundation. We've been discussing some theory with foundation taking apart the Cascade and these other series and you'll find very little of that type of thing in the world of TA extant. I have to say that although the Cascade and things Fibo are interesting, I still have to ask myself the question of how and why it should have anything at all to do with price/time data.
Good stuff all the rest...I would love to sit with you and ruminate....Take a look at the family of double angles(in the first quadrant) whose solutions are PHI or phi. They are located at 18 degree intervals, 18, 36, 56, 72 Where was Gann when he needed them?? The first is 2*sin(pi/10)=phi.... and the second is at 2*cos(pi/5)=PHI, third is 2*sin(3pi/10)=PHI and 2*cos(2pi/5)=phi. Of course they are found in the other three quadrants(not at the four winds though) differing by sign but are found in their assigned slots at 18 degree intervals. I'm surprised TA hasn't gone bananas over these a la Gann....
last sentence "So if you don't like using the Fib ratio 1/2 to get .5, this limiting value of phi' is another way to get to that magic number. <ggg>"
Right <ggg>!!!
I read an interesting theory once why many structures in nature follow PHI and phi and it was based on the fact that these systems are actually very ordered. A basis in self similar structures...fractals etc. People will tell you that PHI and phi are seen all around in nature and so should be seen in financial data as well. And they show things like strands of DNA or the construction of human fingers or faces , flowers and the like. All resulting from very ordered and determined systems. Interesting but I believe basically flawed logic to justify Fibo use in studying price/time data. What I don't see are Fibo numbers showing up less ordered systems. Nor have I seen fibo numbers blamed for determining these types of systems. There may be examples I'm not aware of but I don't think they are in abundance like their more ordered bretheren. Self similar structures are there...fractals are there...but Fibo ratio relationships?? Why not use the powers and roots and such?? Why indeed sir, LOL!! I hold the theory that it's probable that Fibo number relationships will be seen in price/time data because of what I've referred to as it's random determinism. It's not completely random and I also believe it exhibits pockets of determination which I, for example, trade with using one minute charts every single day. But, I believe any Fibo relationships seen are more coincidence then determined....a consequence of what is most undetermined about market behavior. From what I have seen, they are not statistically significant and it surprises me not that this has never been discussed beyond what is seen nor refuted in TA.
Everyone should populate their Fibo retrace tools with sixths and take a look and then take another shot at thinking about how this data behaves and how undeterministic the underlying systems really are.
However, if you're trading successfully and on a profitable run, like the young pitcher in Bull Durham, avoid doing anything untoward with your measurement tool.
Walt |
