Fibonacci and Gann Applications in Financial Markets

10
Other Interesting Studies Using
Synthetic Ratios
Experiments with 15,
12,
squaring of circle and neo-platonic retracements.
In this chapter some applications that do not have a clear historic basis are looked at and
tested within market conditions. This chapter looks at some further extension of the
‘art’ of technical analysis and tests whether such ‘abstract’ techniques are useful to the
technical analyst. When considering the application rules and methods discussed in
earlier chapters, there may be the impression that technical tools are ‘fixed in stone’and
cannot and should not be altered. There cannot be anything further from the truth. Technical
techniques are always developing, as are new patterns and rules and especially
momentum studies. When using a screen-based charting service, the sheer number of
techniques and studies that can be applied to a simple chart may give the analyst the
impression that more information cannot be added. Are not all technical tools already
discovered and under use? Not at all is my response. In my time as a professional technical
analyst I have seen the traditional bar and line chart and Point and Figure chart
being superseded by the introduction of Candlestick Charting and indeed Market Profile.
Although the interpretation of candlesticks needs some deeper study, as does
Market Profile, these techniques are still relatively underused. Almost any user of
price information prefers to have a candle chart on display, not because they understand
the groupings of the particular patterns or indeed could tell an Harami from a Black
Crow, but the display lends itself to easier viewing of price action as the day develops.
It is a careless analyst who would attempt to guess what the candle pattern is going to
be once the end-of-the-day price is added, and indeed predicting the colour, shape and
extension of a candle is dangerous in the extreme. Similarly for the distribution pattern