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Strategies & Market Trends : ajtj's Post-Lobotomy Market Charts and Thoughts -- Ignore unavailable to you. Want to Upgrade?

To: Sun Tzu who wrote (72781)	10/23/2022 5:24:21 AM
From: Qone0	3 Recommendations Recommended By ajtj99 bull_dozer Sun Tzu Respond to of 97597

76.4 is the mirror image of the 23.6. Take 100 and subtract 23.6 and you get 76.4 It has no harmonic meaning. NDX is in the drivers seat, SPX just kind of sloppily follows along. To have harmonic meaning in a ratio it has to be the square of something. .707 is the square of .50 .786 is the square of .618 1.272 is the square of 1.618 Now for the special .886 ratio<G> it is both the 4th square of .618 and the square of .786. So .886 is a harmonic ratio cluster. The Origin of the 0.886 Retracement, by Scott Carney.Although the 0.618 and 0.786 retracements have been used in Fibonacci analysis for quite some time, the introduction of the 0.886 ratio is a relatively new discovery. Although I have discussed the ratio on various websites, such as eSignal’s www.esignal.com and www.esignalcentral.com, in recent years, popularizing its use in the Fibonacci trading realm, I am not solely responsible for its invention. The 0.886 retracement was conceived through my collaboration with Jim Kane. Jim Kane of www.KaneTrading.com has investigated the whole range of Fibonacci-derived ratio levels for years. He and I have shared many ideas with each other, in an unprecedented fashion, that have advanced the field of Fibonacci analysis as it relates to the financial markets. In my opinion, the 0.886 retracement is one of the finest discoveries in technical analysis in the past 10 years. The retracement is crucial in differentiating harmonic pattern structures and frequently the determining price level in areas of clear support and resistance. Initially, I showed Jim a few different pattern structures in my attempt to prove that “not all Gartley patterns are the same!” At this time (a few years ago), I was refining each 5-point price structure based on specific Fibonacci alignments. When it came to the 0.886, I noticed many specific commonalities that developed in price structures that accompanied the retracement. In particular, I realized that the B point within a Gartley-type structure that was less than a 0.618 would almost always exceed the expected 0.786 retracement of the XA leg at the projected completion point. I showed Jim this new pattern — called “the Bat” — which used what I was calling a “deep 0.786 retracement.” I told him that executing at the 0.786 without regard to the structure was a critical mistake. Besides, the 0.886 retracement, when used in the correct pattern structures, reduced the amount of risk in previously “undifferentiated” Gartley set-ups by 10 percent. I showed him the relationships between the “deep 0.786 retracement” (0.886) and the 1.618 XA projection in the Deep Crab pattern. After we discussed the ideal Fibonacci alignments for the Bat versus the ideal Gartley pattern and in the Deep Crab, he said to me, “The deep 0.786 is really an 0.886 retracement, the fourth root of the 0.618 or the square root of the 0.786.” Although I defined the price structures and basic Fibonacci alignments for harmonic patterns such as the Bat, Crab and Deep Crab patterns, I want to recognize Jim for his tremendous contribution to Harmonic Trading and for quantifying the 0.886 retracement. Jim and I agree that it is the most effective Fibonacci ratio in the entire Harmonic Trading arsenal. The 0.886 Fibonacci retracement is frequently the determining price level in areas of well-defined support and resistance. Valid reversals in patterns such as the Bat frequently turn precisely at the 0.886 retracement within the Potential Reversal Zone (PRZ). Although these considerations will be covered later in this article, the 0.886 retracement is an unprecedented discovery that is vital to Harmonic Trading techniques. I use the 0.886 retracement when day trading the Standard and Poor’s 500 mini-contract (ES). The ES frequently reverses at distinct 0.886 retracements and defines short-term support and resistance. A recent example of the effectiveness of the 0.886 retracement occurred during an entire week of trading in mid-January 2004. The mini-contract trended steadily higher throughout that week, rallying at three, consecutive, 4-day 0.886 retracement levels.