SUPPORT AREA:
Below the neutral zone, there are four support levels called SA, SB, SC, and SD. These are Fibonacci support levels based on the previous weeks stock actions.
R
R
E
RD
E
S
S
I
I
S
RC
S
T
T
A
RB
A
N
N
C
C
E
RA
E
NZUP
PREVIOUS
NEUTRAL ZONE
DAYS CLOSE
NZDN
NEUTRAL ZONE
SA
S
S
U
U
P
SB
P
P
P
O
SC
O
R
R
T
T
SD
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Applying Technical Analysis
On the next page is an illustration of how to use T.J. Web Levels. T.J.’s Web Levels are shown for McDonald’s stock based on Friday’s close.
The Web Levels suggest support and resistance levels for the next trading day. If the stock price rallies on Monday, the last resistance level (RD) suggests this stock should not trade past the $34 level. Equally, the last support level (SD) suggests that this stock should not trade past the $30 level. On Monday, McDonald’s stock traded to a high of 31
3/8 and to a low of 30, containing stock price movement to within this day’s SA and SD
Web Levels.
This example has been given to illustrate the principle behind T.J.’s Webs. You cannot expect these Web Levels to hold true all the time, but if used on a continual basis they
(1) FRIDAY’S CLOSE
(2) TRADING ACTION FOR MONDA
will consistently provide good support and resistance.
Y
T.J.’s Web resistance levels
based on Friday’s close
neutral
levels
high
This is where
this stock
The T.J.’s Web Levels
actually
based on Mondays
traded to
close are shown
on Monday
on the next page.
low
T.J.’s Web support and resistance
T.J.’s Web support levels
held at the high and the low end range
for Monday
for the day.
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Applying Technical Analysis
The T.J.’s Web Levels can be used with intraday indicators such as the slow 21 bar sto-chastics and the Elliott Oscillator on a five minute bar chart. When the Elliott oscillator gives a true Elliott divergence, as described in the earlier in this section, and the stochas-tics is above the 80 level, a short signal can be initiated at a T.J.’s Web Level using the next Web Level as the stop. A buy signal works exactly the opposite.
(3) MONDAY’S CLOSE
(4) TRADING ACTION FOR TUESDAY
T.J.’s Web resistance levels based
on Monday’s close
high
neutral
levels
This is where the stock
traded to on Tuesday
low
T.J.’s Web neutral levels
held at the high and low
T.J.’s Web support levels
end range for the day.
for Tuesday
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Applying Technical Analysis
Extended Fibonacci Time Ratios
1.62 X
2.62 X
Time Between
Initial
Initial
Two Swing Points
Time
Time
P or J
P or J
Extended Fibonacci Time Segments
Between Two Major Highs
Extended Fibonacci Time Segments
Between Two Major Lows
P or J
1.62 X
2.62 X
P or J
Time Between
Initial
Initial
Two Swing Points
Time
Time
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Applying Technical Analysis
Extended Fibonacci Time Ratios
1.62 X
2.62 X
Time Between
Initial
Initial
Two Swing Points
Time
Time
Fibonacci Time Segments
P or J
Between A Major High & Major Low
P or J
The general idea is to take the initial time between two Primary or Major Pivots. These pivots can be identified by the user or from the labels generated by the software from the Pivots Menu.
This initial time is extended to the future using various Fibonacci ratios. We suggest 1.62
and 2.62. However, you can use any combination. If you do not like the preset ratios we have added, you can enter your own values such as 3.79 , 2.94, etc.
The theory is to look for a potential change in trend at these future extended time periods.
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Applying Technical Analysis
FIBONACCI TIME CLUSTERS
Take the time distance (number of bars) between two pivots and extend (project) ratios of this time distance to the future. You will notice that many of the future pivots (change in trend points) occur at these extended time periods.
QUESTION:
What ratios should I use? Do I use all the pivots or just the Primary and Major ones? Do I use High to High swings or Low to Low swings?
ANSWER:
A very large number of traders use this method. However, each trader uses different ratios, different sets of pivots, and different types of swings. You can basically use any combination and still obtain accurate projections some of the time. From our research, we have not found any one combination that works best all the time.
Extended
Extended
Ratios
Ratios
Time Distance
Between Two Pivots
Potential time
periods for change
in trends
Time Distance
Extended
Extended
Between Two Pivots
Ratios
Ratios
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Applying Technical Analysis
QUESTION:
Then how does one use this technique?
ANSWER:
Use all reasonable combinations, and look for a group of Clusters. Lets assume numerous traders are using this study, each using different ratios, pivots, etc. Regardless of which combination is used, the collective projections of all traders will result in certain areas where a majority of the traders will get a CHANGE IN TREND PROJECTION.
Thus the areas identified by a group of Clusters define such collective projection levels.
Future Projection Using
Various Methods
Time Distance
Between Two Pivots
Method A
Method B
Method C
Method D
Method E
Method F
Time Distance
Between Two Pivots
Collective Results
Areas where a majority of methods
collectively project a future
change
in trend.
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Applying Technical Analysis
Example – Fibonacci Time Clusters
The chart shown below is the Daily December 1989 D-Mark. The Time Clusters were generated by using the following:
# All Primary and Major Pivots.
# Fibonacci Time extensions of 1.62 and 2.62 with 100 % weighting.
# High to High Swings plus Low to Low swings
# Minimum 10 bars in between pivots
# Maximum 100 bars in between pivots.
For more details on the above, please see next page.
Circles show Change in Trends
that were projected by the
Fibonacci Time Clusters.
December 1989
D-Mark
Projection For:
Future
Future
C.I.T
C.I.T
1/11/90
2/08/90
Fibonacci Time Clusters.
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Applying Technical Analysis
FIBONACCI EXTENSION PRICE CLUSTERS
Fibonacci extensions and retracement levels are used by just about every trader. Sure they may all have their own unique methods of applying them, or their own secret Fibonacci ratios.
Regardless of the numerous methods used, the collective projections of all traders will result in certain price levels where a majority of the traders will get the same support or resistance projections. The software can identify such collective levels by way of Clustering.
2.62 x Z
Fibonacci
2.62 x Y
1.62 x Z
Extension
Cluster
1.0 x Z
1.62 x Y
1.0 x Y
Z
Y
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Applying Technical Analysis
Example – Fibonacci Extension Price Clusters
The chart shown below is the Daily March 1992 Swiss Franc. The Fibonacci Price Extensions were generated by using the following:
$All Primary and Major Pivots.
$Fibonacci Price extensions of 1.62 , 2.62 and 4.25 with 100% weighting
using Rallies.
March 92
Using 1.62, 2.62, & 4.25
Fibonacci Ratios
Swiss Franc
as of 11/04/91
Major Resistance
Level at 7360
Cluster of Fibonacci
Price Extension Identified
By GET.
Projection made on 11/07/91
when price was at 68.17
Projection:
March 92
Actual High 73.93 on 1/7/92
2 Months Later
Swiss Franc
The initial cluster of 7360 was
as of 11/04/91
projected by the software as early as
November 7th, 1991.
Result:
Two months later, the March Swiss
Initial Projection made
topped out at 73.93.
from here to 73.60
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Applying Technical Analysis
FIBONACCI RETRACEMENT PRICE CLUSTERS
Just like the extensions, traders all around the world use Fibonacci Price Retracement levels to determine support and resistance levels. Different traders use different retracement levels and also calculate from different swing levels.
Regardless of the numerous methods used, the collective projections of all traders will result in certain price levels where a majority of the traders will get the same support or resistance projections. The software can identify such collective levels by way of Clustering.
38 %
50 %
62 %
38 %
38 %
50 %
62 %
50 %
FIB RETRACEMENT
62 %
CLUSTER
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Applying Technical Analysis
Example – Fibonacci Retracement Price Clusters
The chart shown below is the Daily June 1992 Crude Oil. The Fibonacci Price Retracements were generated by using the following:
$All Primary and Major Pivots. Fibonacci Price retracements of 38%, 50%, 62%
and 75% with 100% weighting using Declines.
June 92 Crude Oil
Using 38%, 50%, 62%, & 75%
on 1/22/92
Fibonacci Retracements
20.10 to 20.40 level
Major Retracement Cluster
Identified by GET
Projection:
June 92 Crude Oil
on 2/25/92
The initial cluster of 2010 to 2040 was
Actual High
projected by the software.
at 20.00
Result:
The actual high in the June 92 Crude Oil
was at 2000.
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Retracements, Extensions, and Elliott Extension Buttons:
Three different types of Price Clusters can be calculated. They are graphically displayed below: