June 2011
Intermediate to advanced
240 pages
6h 42m
English
Content preview from Trading with Charts for Absolute Return
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PHI-ELLIPSES IN COMBINATION WITH OTHER FIBONACCI TRADING TOOLS
Trend lines and trend channels were described in detail as Fibonacci-related graphical trading tools in Chapter 4. Here the discussion will start with the combination of trend channels with PHI-ellipses and then explain how to combine trend lines and PHI-ellipses.
Combining PHI-Ellipses and Trend Channels
PHI-ellipses can perfectly be combined with trend channels. However, there is one major difference from the trend channels described Chapter 4. Normally, trend channels are drawn on the outside of a price move, as shown in Figure 5.41.
The valleys at points 1, 2, and 3 define the position of the outside line of the trend channel, whereas the parallel line to the outside line runs through the peak at point 4.
Trend channels drawn in combination with PHI-ellipses run a little differently, because the outside line of the trend channel is identical with the median line of the PHI-ellipse (see Figure 5.42).
FIGURE 5.42 EUR/USD: Trend Channel Outside Line Is Identical to Median Line of PHI-Ellipse
Source: www.Fibotrader.com, 2010.
Comparing both charts on the Euro versus the U.S. Dollar, it becomes obvious that the trend channel combined with the PHI-ellipse ...
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