Fibonacci and Gann Applications in Financial Markets

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Other Interesting Studies Using Synthetic Ratios 185 consolidation about 41.4/44.7% seen on the chart is purely coincidental. Recovery hopes rest here on a break in the 52.3% fanline and move higher above 3.20%, but again there is the traditional congestive resistance zone to navigate first ahead of that level. Once that has been taken out then there is an increased threat to the longterm spread narrowing move as recovery beyond 52.3% also means an end to the narrowing channel that has existed since the high in May 2002. THE PYTHAGOREAN, PLATONIC AND NEO-PLATONIC VIEW OF PROPORTION AND HARMONY Readers are aware that the Fibonacci sequence and its proportions comes from a period known as the Renaissance, but even further back, in antiquity, the search for proportion as a means to understanding the whole, the Grand Theory of Everything of its day, can be taken as far back as the Pythagorean school in ancient Athens, circa 600 BC. However, it was only later that his thoughts on the relationship between music and space (we would think of proportion here) were written down and studied further in the work of Plato (d.347 BC) on nature, music, mathematics and the neoplatonists thereafter. Pythagoras had noted that the notes from the anvil of a blacksmith changed for different hammer weights and believed that the notes were dependent on the weight. Taking this a little further and looking at similarly tensed strings, it was noted that plucking one at half the length of the other gave an octave higher than that of the original length (diapason). Subsequent divisions gave musical Fifths (ratio of string is 2:3, diapente) and Fourths (ratio 3:4, diatessaron) and so on. In the search for a universal theory linking all of nature, music, mathematics, etc., Plato described in The Timaeus how: The fairest of all bonds is that which makes of itself and the terms it binds together most utterly one, and this is most perfectly effected by a progression (Timaeus, 4). There were some rules to this (see below), which for Pythagoras summed up the essence of harmony: God did not of course contrive the soul later than the body, as it has appeared in the narrative we are giving; for when he put them together he would never have allowed the older to be controlled by the younger. Our narrative is bound to reflect much of our own contingent and accidental state. But God created the soul before the body and gave it precedence both in time and value, and made it the dominating and controlling partner. And
186 Fibonacci and Gann Applications in Financial Markets he composed it in the following way and out of the following constituents; From the indivisible, eternally unchanging Existence [Essence] and the divisible, changing Existence of the physical world he mixed a third kind of existence intermediate between them: again with the Same and the Different he made, in the same way, compounds intermediate between their indivisible element and their physical and divisible element: and taking these three components he mixed them into a single unity, forcing the Different, which was by nature allergic to mixture, into union with the Same, and mixing both with Existence. Having thus made a single whole of these three, he went on to make appropriate subdivisions, each containing a mixture of the Same, and Different, and Existence. He began the division as follows. He first marked off a section of the whole, and then another twice the size of the first; next a third, half as much again as the second and three times the first, a fourth twice the size of the second, a fifth three times the third, a sixth eight times the first, a seventh twenty-seven times the first. This results in the following progression: 1, 2, 3, 4, 9, 8 and 27. It is interesting that repeating the above rules from stage 2 onwards to extend the series gives the following: 54, 81, 108, 243, 216, 729, 1458, 2187, ... Taking the relationships of the resulting series in a similar way to the Fibonacci series, results in not a single limit but six finite values: For the relationship n � 1:n, 29.6%, 44.4%, 50.0%, 66.7%, 75.0% and 112.5% 14.8%, 33.3%, 50.0% are obtained, while for the relationship n � 2:n and for the relationship n � 3:n the following are obtained 9.9%, 14.8%, 16.7%, 22.2%, 25.0%, 37.5% From work in previous chapters, some of these values are already known to be important in Fibonacci and or Gann theory, so can be dismissed at this stage. This leaves 9.9%, 14.8%, 16.7%, 22.2%, 29.6%, 37.5%, 44.4% and 112.5% to be tested. In this example of the ten-year Bund yield (Figure 10.12), the extremes of the retracement are set at the high and low. Behaviour since the low in June 2003 has
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FIBONACCI AND GANN APPLICATIONS IN
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Contents Preface ix 1 Introduction
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For Angus and Jenny for all the ski
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Preface Technical analysis is not a
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1 Introduction to and History of th
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Introduction to and History of the
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10 Fibonacci and Gann Applications
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3 Other Applications of the Fibonac
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Other Applications of the Fibonacci
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4 Charting and Difficulties: A Hist
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Charting and Difficulties: A Histor
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5 Common Errors in Application of F
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Common Errors in Application of Fib
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7 Application and Common Errors in
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Application and Common Errors in Fi
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Page 204 and 205: 11 Conclusion The application of Fi
Page 206 and 207: Conclusion 195 and I believe this i
Page 208 and 209: Conclusion 197 watching it develop
Page 210 and 211: Conclusion 199 created by futures e
Page 212: Conclusion 201 Gann analysis, where
Page 226 and 227: Appendix 2 Glossary of Common Terms
Page 228 and 229: Glossary of Common Terms 217 Month
Page 230: Glossary of Common Terms 219 Englan
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Page 239 and 240: 228 Index pi, discovery, 1-2 pit tr
Page 241: 230 Index ‘V’ bottoms/tops, 15-
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