FibCalc Examples

The opinions expressed in this column are based on how I interpret Events, the Market, and the Charts -- unless otherwise noted --  and are not recommendations to buy or sell securities. Trading stocks involves risk. Never put your money on the line without a thorough understanding of what you are doing, and why you are doing it, based on your own personal experience. No Chart Pattern works out the way we think it should every time,  so it is vitally important to have a protective Stop-Loss and/or Exit point planned before entering into a trade. Do your own research and testing before attempting any of the techniques discussed in my columns, materials, courses, or emails. I cannot be held liable for any trading decisions based on any information obtained from me. - Rick LaPoint

Real Examples from the Market

UpTrend Retracing Down

DownTrend Retracing Up

Lesson: 50% Phenomenon Theory

50% Phenomenon Down

Pivot Dates by Ratio

50% Phenomenon Down

I love this technique. I did a random search thru all of my many Directories of charts and this is the first I came up with. I'm telling you this because I don't want you to think I would show you things that are perfect so I could manipulate your perception of how things really are. The Market is sloppy. FibCalc will not give you perfect numbers. That would be impossible. The Art of Fibonacci is understanding the difference between "Close but no Cigar," and "Close is good enough for Government work."

Remember the Rules for the 50% Phenomenon:

1) The Gap must come after a Reversal.
2) We measure the White Space of the Gap, not necessarily the Open or Close points of the actual days.
3) The 50% point of the overall move can be at the Low of the Gap, the Center of the Gap, or the High of the Gap. We never really know where the mid-point will turn out to be until the Move is over. The most common is the Center of the Gap.

Here is FibCalc II, and then we will examine the actual chart. As it turns out, CENTER is the Correct basis which determines our Target.

Pretty darn close, if you ask me. Note that when Day Trading the Gap with the 50% Phenomenon, we look for the Low (or high) of the Second Day only.

What is the value of a Profit Target? Recognizing a good place to exit the Trade and pocket your Profits, right?

Now notice that the 50% Phenomenon is usually worked out with Gaps. Gaps require 2 days.

The question I am often asked is this: "Where do I begin my High or Low? Can I start with the day before today?

The answer is YES. This Run took 2 days, and the low of the second day would be a natural place to determine your FibCalc Low for an anticipation of a Bounce back up.

OR, tomorrow may give us a lower Low. That happens often, right? We could stretch this Fibonacci Run into several days, on this 15 minute chart.

Never be afraid to readjust your criteria for changing Market conditions.

I look at Price and Time as a  flowing Ocean. The Tide comes in, the Tide goes out. We only close the Day as a unit of measurement. Never fear to blend your Days, especially with the Intraday charts.