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

Figure 3.34
Baseline of a PHI-channel.
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BASIC PRINCIPLES OF TRADING STRATEGIES
The regular trend channels generally are used as indicators of
trend market moves, not as trading tools to generate buy and sell sig-
nals. PHI-channels are a good Fibonacci-related instrument to gener-
ate buy and sell signals, especially when used in combination with
other trading tools, as described later in this book.
Summary
Regular trend channels and PHI-channels are important tools for
every analyst. They represent investor behavior and often indicate the
support and resistance areas in the market.
In contrast to regular trend lines and trend channels, which are
mostly used for trend indications, PHI-channels can be used to gener-
ate buy and sell signals. Breakouts of PHI-channels lead to buy and
sell signals at the outside lines of the respective PHI-channels. We de-
scribe PHI-channels in greater detail in our previous book, 
The New
Fibonacci Trader.
Figure 3.35
Baseline and outside parallel line of a PHI-channel, and resulting
trend lines in Fibonacci distances.
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4
A
PPLICATIONS OF
T
RADING
S
TRATEGIES
In this chapter, we f irst brief ly describe the relevant investment prin-
ciples for merging candlestick charting into Fibonacci analysis. We
then explain how to apply these trading strategies to market data.
The discussion includes double top and double bottom formations,
Fibonacci corrections and extensions, applications of candlestick pat-
terns and important price patterns in bar charting, and f inally, the
advantages of using PHI-channels.