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

PHI-Ellipses on Japanese Yen Cash Currency Sample Data
To begin our discussion of applications of PHI-ellipses to market data,
we f irst show a daily chart of the Japanese Yen cash currency with no
added tools.
In Figure 5.24, the plain chart represents just the datastream
and enables the analyst to see how PHI-ellipses will later f it into the
overall picture. The second chart in Figure 5.24 contrasts the set of
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WORKING WITH PHI-ELLIPSES ON DAILY DATA
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O–H–L–C (open–high–low–close) data by integrating PHI-ellipses,
which serve as the backbone of our analysis of the relevant market
moves.
Figure 5.24
Japanese Yen chart from 02–00 to 02–01. Plain O-H-L-C price
move and price move with PHI-ellipses PHI01 to PHI08.
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PHI-ELLIPSES
The relevant PHI-ellipses have been numbered PHI01 to PHI08
in Figure 5.24. We refer, consecutively, to all eight PHI-ellipses and
demonstrate in depth how they were generated.
The basic structure of PHI-ellipses is always the same. When
drawing a PHI-ellipse, its borders must def ine and touch at least four
points. The four points are (1) starting point of the PHI-ellipse,
(2) left side, (3) right side, and (4) bottom of the PHI-ellipse.
The starting point is usually the highest or lowest point in a
price move. But there are exceptions in patterns such as irregular
tops or bottoms, overlapping PHI-ellipses, or very small angles in a
PHI-ellipse.
PHI-ellipse PHI01 (isolated in Figure 5.24) consists of a simple
3-wave pattern that should, by now, be familiar to readers (see Fig-
ure 5.25).
The starting point in PHI01 is A, and the f irst of the two side
points is B. We can already draw a PHI-ellipse through the peak at
point C, but to complete a PHI-ellipse in a 3-wave pattern, the third