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

Figure 3.2
The rule of alternation shown in the sunflower. 
Source: The New 
Fibonacci Trader Workbook,
by Robert Fischer (New York: Wiley, 2001), p. 5.
Figure 3.3
Geometry of the golden rectangle. 
Source: The New Fibonacci
Trader Workbook,
by Robert Fischer (New York: Wiley, 2001), p. 7.
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FIBONACCI ANALYSIS
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15
Parthenon Temple in Athens
The proportions of the Parthenon temple in Athens bear witness to
the inf luence of the golden rectangle as well as the golden section on
Greek architecture.
The proportions of the Parthenon temple f it exactly into a
golden rectangle; its total width is exactly 1.618 times its height (see
Figure 3.4).
Other geometric curves that are important to humankind are
plentiful in nature. The most signif icant to civilization include the
horizon of the ocean, the meteor track, the parabola of a waterfall,
the arc that the sun travels in the sky, the crescent moon, and the
f light of a bird.
Many of these natural curves can be geometrically modeled using
ellipses. The latter f inding leads into a brief description of trading
tools that use the Fibonacci ratio. A basic knowledge of the construc-
tion and functions of these tools is necessary to understand the trad-
ing strategies that are introduced later in this book.
Introduction of the Fibonacci Trading Tools
Corrections
In general, for corrections with Fibonacci-related trading tools, an im-
pulse wave that def ines a major market trend upward or downward
will have a corrective wave before the next impulse wave reaches new
territory. This occurs in both bull market and bear market conditions.
Analysis would be easy if we could detect a single general pat-
tern of corrections. The problem is that there can be many more price