Why Are Fibonacci Ratios of 88.6%, 78.6%, 127.2% Useful?

[FFTrader 10]

 

Ok, I am always been a big fan of 61.8% Fibonacci Ratio (so is 50%) - but why are Fibonacci Ratios of 88.6%, 78.6%, 127.2% useful?

 

I see them in Gartley patterns and the instrument I trade - GC futures. I saw many threads online regarding it is good in Forex ...

 

However, no one had address the issue of why it works - I see the pattern in GC for 88.6% on the 60 min chart from last Friday up to current, for example, in addition to the 61.8% and 50%.

 

My objective is to determine why it works and hopefully determine when it will have a higher probably of working.

[tradingwizzard 10]

 

Ok, I am always been a big fan of 61.8% Fibonacci Ratio (so is 50%) - but why are Fibonacci Ratios of 88.6%, 78.6%, 127.2% useful?

 

I see them in Gartley patterns and the instrument I trade - GC futures. I saw many threads online regarding it is good in Forex ...

 

However, no one had address the issue of why it works - I see the pattern in GC for 88.6% on the 60 min chart from last Friday up to current, for example, in addition to the 61.8% and 50%.

 

My objective is to determine why it works and hopefully determine when it will have a higher probably of working.

 

well, I don't know about Gartley or stuff like that, I trade mostly with Elliott....and under Elliott the Fibo ratios are essential, even the ones no one really looking at.....

 

I am talking about 81% (which makes the distinction between a common flat and a weak b wave flat), 123.6% (which establishes the irregular) or even the 138.2%, which means the c wave to come in a flat will not retrace the previous b wave as that one was quite strong...and the list can go on as Elliott is mostly about Fib ratios...

 

TW

[SIUYA 11]

 

Ok, I am always been a big fan of 61.8% Fibonacci Ratio (so is 50%) - but why are Fibonacci Ratios of 88.6%, 78.6%, 127.2% useful?

 

 

some would argue any line, any ratio will work and have you seeing valid points, and hence its all useless. There is a thread here somewhere talking about that.....

 

Personally I use the non-fib number of 50%.

Why?

Because it seems to work pretty well for the types of retracements I look for, its simple, easy to judge, easy to measure, makes intuitive sense, and seems to work pretty well in most circumstances.

[MightyMouse 11]

some would argue any line, any ratio will work and have you seeing valid points, and hence its all useless. There is a thread here somewhere talking about that.....

 

Personally I use the non-fib number of 50%.

Why?

Because it seems to work pretty well for the types of retracements I look for, its simple, easy to judge, easy to measure, makes intuitive sense, and seems to work pretty well in most circumstances.

 

50% makes perfect sense.

[FFTrader 10]

I am happy with 50% and 61.8% too - the problem arises when you see other ratios works - or become trade-able, etc.

 

The thing with trading - and I am sure many traders here will agree - is that if there are enough participants at a level, a market will go with the majority. I am sure if you look on the charts of relatively thinly traded futures like GC - as oppose to larger volume ES - you may find these odd percentage retraces, for example.

 

Whether these retraces will produce a significant turn that takes out the original points of the retrace on the other side OR simply produce a trade-able / scalp-able level/zone is probably two different stories.

 

:2c: :2c: :2c:

 

If you Google Gartley, you will see many references to 88.6%, for example. I keep wondering why and have not found a reason. Anyway, I guess there are no real reasons - like the golden ratio - that makes these other levels work somewhat. :roll eyes: