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 ...

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