Using Fibonacci Numbers to Target Future Prices

Because prices frequently conform to Fibonacci ratios when creating support or resistance zones, it is possible to use Fibonacci numbers to anticipate where an advance might stop. Figure 6-6 shows one set of Fibonacci numbers for one advance of Liberty Corp. Levels 1.38 and 1.62 show likely resistance levels if the advance should become reestablished.

HB/2V*TB 26.25 22.25 26.25 18/2B/94 FHI 10/25/94 TUE

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Figure 6-5 Weekly plot of Infocus Systems. An accordion composed of Fibonacci numbers enclosed aTound the advance from A to B. Note that support and resistance has occurred at various Fibonacci numbers.

Price Advance k

32.625 32. 375 32. 375 04/09/% HON R4/ftfl/% H0H 2499 - 2.00

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Figure 6-6 Weekly plot of Liberty Corp. The levels 1.38.1.62. and 2.00 are possible targets if the advance should be reestablished. Note that the fractional Fibonacci numbers have acted as support and resistance.

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