Human behavior—and investor behavior—is not only reflected in chart patterns such as large swings, small swings, or sideward markets, but to a significant degree in peak and valley formations.
In addition to the patterns described in the preceding section, we have to consider constellations of peaks and valleys that lead to trend lines and trend channels.
By introducing PHI-channels, or Fibonacci trend channels, as independent Fibonacci trading tools, we make use of peak and valley formations in the markets and how to forecast major changes in trend directions.
In this section, we first describe the general structure of regular trend channels. Then we discuss PHI-channels as specific trend channels.
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