WHAT MAKES THE PHI-ELLIPSE SUCH A SPECIAL TRADING TOOL?

The PHI-ellipse is a special Fibonacci trading tool. It was tested on daily data from 1996 through 2010 on five assets: the DAX Futures Index, the S&P 500 Futures Index, EUR/USD, USD/JPY, and 30-year U.S. Treasury Bonds. Some of the parameters can be described as follows:

  • It is the only known trading tool that integrates price and time into one analysis tool.
  • It can dynamically adjust to price moves. In strong market moves it can stay weeks in the trend direction. In sideways markets it can change direction without getting whipsawed too heavily.
  • Trading signals come opposite to signals generated by technical indicators without any delay in time.
  • The PHI-ellipse can be applied to almost any product that has a enough volatility and high trading volume.
  • Most important, there is no optimization in PHI-ellipses as graphical trading tools.

But, of course, there are negative aspects

  • The PHI-ellipse apparently cannot be programmed for fully automated trading signals.
  • Although the trading rules that will be introduced later in this chapter are definitive, a trader needs a lot of discipline to work with them.
  • Traders must get used to applying PHI-ellipses to price charts.

What makes analysis with PHI-ellipses so special together with the rules introduced later on? The PHI-ellipse is unlike the thousands of technical indicators offered on every trading platform with big swings in the trading results. Working with the rules for PHI-ellipses ...

Get Trading with Charts for Absolute Return now with the O’Reilly learning platform.

O’Reilly members experience live online training, plus books, videos, and digital content from nearly 200 publishers.