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>During the development
> of the windows version of NP, I spent 6 months trying to automate the
> time/price projections using fibo (and other) ratios. In the process I
> ended up proving that there is no validity to the technique.
>
> Regarding the use of fibo ratios for making projections. I think it is a
> good example of the idea that you get what you look for. The theory is
> convincing. After all, these numbers are found in nature and it is
logical
> to assume that they can be found in the charts as well.
I find this most interesting research and is absolutely in line with my own
thinking that the only Fibonacci ratios that have a decided track record of
success are those of actual retracements in the market. The distinction of
what the market has actually done is one thing, projecting where it might go
using the same ratios is quite another.
When the market has made a specific retracement, it is possible to assess
whether the retracement is very bullish, bullish or not likely to take out
the existing high (and a similar matter for when it goes down). But
actually projecting where it is likely to go using Fibonacci numbers is,
from my experience, exactly as Kasanjian Research has found out -
inconclusive and probably futile.
Price action as the market moves and reacts with particular patterns at
points where previous price action has made its mark, is, I have proven to
myself over and over again, to be a very worthwhile way of trading (the
bonds, anyway). Trying to project where the market is going using numbers
or the mathematics incorporated in all the common place indicators I have
tried, has not been successful. Furthermore, so far as waves and cycles
are concerned, the best that I have been able to see of these techniques is
the establishment of which wave or part of the cycle the market is in; as
for where it is likely to go or is actually going is, again, totally
different and I simply cannot see how any projection made can be traded.
Price action, patterns, support and resistance, retracements, etc, are facts
within the market, based on actual buying and selling that has taken place.
They are real and have happened, for whatever reason. How the market moves
and reacts, within and around these parameters can (not necessarily will, so
hence the need for a sound money management technique) give very strong
clues as to what is going to happen next. For me, that is about the best
information I am going to get (bearing in mind the influence of calendar
times and dates) to be able to make a trading decision.
As for the future, it never really comes... it is just the present, as it
reveals itself, which may give you an edge, if you look sharp about you...
Consequently, I find Ed Kasanjian's candour on what his research revealed to
be most refreshing indeed. Just his honesty will help a lot of people.
Bill Eykyn
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