Investing 101: Fibonacci Zone Trading

Fibonacci Zone Trading

Fibonacci time zones are composed by dividing a chart with vertical lines spaced apart in a ratio adhering to the Fibonacci number sequence (1, 1, 2, 3, 5, 8, 13, etc.). The interpretation of Fibonacci Time Zones involves looking for significant price movement near the vertical lines. Also known as Fibonacci Time Series.

Using Fibonacci levels is most often done in relation to price, but it can be used for time as well. Works with day trading, swing trading, stock trading, forex, futures, eminis, etc.

The graphic tool, The Fibonacci time interval, is a set of vertical lines that are drawn from each other on time intervals, which correspond to the numbers of Fibonacci’s sequence. Fibonacci Time interval is the tool of the forecast because, according to a popular belief, the most significant market events occur through the time intervals corresponding to Fibonacci numbers.

Interpretation of Fibonacci Time Zones involves looking for significant changes in price at or near the vertical lines. Time Zones are most applicable to a long-term analysis of price action and are probably of limited value when studying short-term charts.

Inexperienced users of Fibonacci Studies should consider this type of analysis only when viewing charts that span multiple years. In the example charted on the next page, Fibonacci Time Zones were drawn on the Dow Jones Industrials beginning at the 1982 market bottom. 238 AIQ TradingExpert Pro Reference Manual On the chart, you can see that significant changes in the Dow occurred on or near the Time Zone lines.

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