Candlesticks, Fibonacci, and Chart Pattern Trading Tools : a synergistic Strategy to Enhance Profits and Reduce Risk

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PHI-ELLIPSES
analysis based on the numbers of the Fibonacci summation series.
Valuable conf irmations can also come from the application of trend
channels.
PHI-ellipses perform well on every product traded as long as
there is enough volatility, volume, open interest, and liquidity. For a
serious analysis based on PHI-ellipses, we must have an appropriate
sample of products in which the international community of investors
shows a lot of interest. If investors are interested in a product, it is
likely that the product’s market patterns will directly ref lect investor
behavior.
We are always as precise and complete as possible in describing
and analyzing trading tools and in applying them to sets of sample
market data. We introduce entry rules and exit rules, stop-loss rules,
trailing stop rules, and rules for prof it targets. However, no matter
how much detail we provide, we cannot cover the whole spectrum of
opportunities and variations that the analysis of PHI-ellipses implies.
To explain how PHI-ellipses can be applied to real-time trading,
we have presented trading signals on daily data of the S&P 500 Fu-
tures Index between February 2001 to November 2002. Even though
the results look promising, there may be future periods where the sig-
nals do not turn out so well.
To prove that PHI-ellipses can be applied to intraday data as
well, we have presented some examples on 15-minute price data on the
Dax 30 Futures Index. PHI-ellipses have the very best trading poten-
tial on intraday data. Although it takes great discipline and accuracy
to execute signals, every successful trader has these abilities and can
learn how to use this new trading tool. PHI-ellipses work: We use them
for our own trading.
We do not believe that the entire spectrum of system design and
the development of trading strategies founded on PHI-ellipses can ever
be fully automated and computerized. The dynamics of PHI-ellipses
and the three dimensions of price, time, and angle would surely be too
problematic for programmers. But there is no need for fully computer-
ized trading signals. PHI-ellipses in combination with other Fibonacci
trading devices, candlestick patterns, and 3-point chart patterns open
the door for skillful, interested, patient, and determined investors who
need basic and reliable trading tools that are guaranteed to work, if
handled properly.
Generations of investors have tried to apply Elliott’s wave prin-
ciples to successful real-time trading. To the best of our knowledge, no
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