Fibonacci and Gann Applications in Financial Markets

Application and Common Errors in Fibonacci Timelines 113
Figure 7.13
the application of the timescale pattern to occasions when sentiment changes (see
Figure 7.13). This is best seen in the occasions of an outside day (bullish or bearish)
which can come anywhere in developing patterns but is especially useful at congestive
tops and bottoms and at the end of a period of consolidation.
In this example (Figure 7.14), the bearish outside week is in the congestion at the
ten-year Swedish Government bond high back in 1994. Subsequent yield action is
fairly well captured by the timescales, with changes in behaviour from trending to
consolidative and vice versa, and indeed many turning points are identified, notably
in the 1999 low and November 2001 low.
It can be seen from the above examples that application of the Fibonacci
timescales is a little ‘hit and miss’. Key days/weeks are often unidentified, but behaviour
changes are better suited for this analysis tool. In comparison, I feel that there
are better results in using Gann days rather than Fibonacci days. These are constructed
from the Gann Square (often called the Magic Square) shown in Table 7.1.
Here the key days are on the vertical and horizontal points from the origin in the centre
and at the 45-degree lines from the origin. This gives the initial days as 1, 2, 3, 4,
5, 6, 7, 8 ,9, 11, 13, 15, 17, 19, 21, 23, 25, 28, 31, 34, 37, 40, 43, 46, 49, 53, 57, 61,
65, 69, 73, 77 and so on. When applying these to the previous chart, the chart in
Figure 7.15 is seen. There is little to signify improvements in this application, especially
in the first days, but as the cycle extends some key days are identified. In Chapter
9 on Gann, further use of the Gann Square and relevant date function applications
are looked at in more detail.