Fibonacci and Gann Applications in Financial Markets

11
Conclusion
The application of Fibonacci ratios to financial market analysis has a noble past.
Although the use of Fibonacci retracements, fans and arcs in analysis has from time
to time fallen in and out of favour, particular application of Fibonacci analysis
remains a strong tool in the arsenal of analysts. Some financial and technical analysts
seem to be over-reliant on techniques that require computing power to deliver,
for example, RSIs and Stochastics and other less famous momentum indicators. As
mentioned before, this is a great help in the analysis of a chart, but the primary goal
of a technical analyst has to be on the prediction of price objectives with a reasonable
degree of confidence, and tools utilizing price moves, such as pattern recognition
and retracements, should be constantly used and should not be overlooked.
Favourite techniques come and go as do fashionable ways of looking at price
moves. However, seasoned technical analysts will take what they can from new
techniques and, instead of discarding old techniques in favour of the new, will adapt
and adopt new methods and use them in conjunction with more traditional techniques.
I have known analysts who have no interest in traditional methods of technical
analysis but who concentrate on Market Profile or Candlestick analysis to
the exclusion of other analysis tools. While there is some success in this method, I
believe that to construct an investment argument from only one technique is dangerous
in the extreme and it is better to use several techniques together, as seen in
Chapter 8 on ‘Total Analysis’ in order to get a clear and confident outlook.
With the application to Elliott wave theory (EWT) and the acceptance of the work
of R.N. Elliott, Fibonacci levels gained more importance and resurgence in use during
the last twenty years or so and remain key elements of EWT itself. However, this
has seen the traditional use and application of Fibonacci analysis slip out of the
forefront of tools available to the technician, as the association with EWT has suggested
that it is only appropriate for use in that analysis tool, and EWT is often seen
as the preserve of the few. This is of course wrong, as Fibonacci retracements, arcs