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

BASIC FEATURES AND PARAMETERS OF PHI-ELLIPSES
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and magnitudes. As price action progresses, peaks and valleys may
touch the outside of a PHI-ellipse several times without destroying
the pattern.
We have analyzed and worked with PHI-ellipses for many years,
and have found it fascinating to observe the different kinds of price ac-
tion within PHI-ellipses. Based on the developing price action, PHI-
ellipses might need adjustment, which is why working with them takes
such discipline. But once investors get used to them, they realize that
PHI-ellipses are amazing Fibonacci-related trading tools.
There are many possible price behaviors within PHI-ellipses. Ac-
cording to the appropriate ratio for drawing a PHI-ellipse chosen from
the PHI series (see Figure 5.1), PHI-ellipses may be fatter or thinner,
longer or shorter. But these facts do not have to worry investors too
much, because price action itself shows up before the f inal structure
of the PHI-ellipse. Investors must have tremendous patience and f lex-
ibility to wait until market pricing reaches the end of the PHI-ellipse.
However, the dynamism and f lexibility of PHI-ellipses can also be an
investor’s strength, because no other investment tool can make price
patterns as graphically visible.
There is no guarantee, only a high probability, that the end of a
PHI-ellipse will ever be reached. If the f inal point of a PHI-ellipse is
not reached and market pricing leaves the borders of the PHI-ellipse
prior to the end, then we have to reevaluate price action and start look-
ing for the next PHI-ellipse that unfolds.
Figure 5.4 shows two typical price movements that do not reach
the f inal points of the PHI-ellipses.
Figure 5.4
Price movements not reaching the final points of PHI-ellipses.
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