Saturday 6 July 2013

Are Fibonacci numbers important?

I have 68 bots running currently, none of which use Fibonacci numbers. Now that's not to say that they are not possible future inflection points ...

Which they are. Its easy to attribute cause to Fibonacci ratios, merely because they are a self-fulfilling argument, i.e. if a Brazilian people (the number of people it would take to fill Brazil) traded a currency pair using Fibonacci numbers, then their actions would mean that they would influence the price with their supply and demand. same goes for round numbers (e.g. cable support at 1.5000) which are psychological support/resistance numbers.

Consider the action of major banks. No desk head says "sell at 1.49372", rather they say sell at one and a half (1.5000). Junior traders responsible for bulk execution will set their limit/stop orders to exactly 1.5000, hence these become important numbers.

If you watch a gold tick chart, you will clearly see the "magic" numbers.

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