by TUCKER J. EMMETT
The growth in popularity of my own technical application of the Fibonnacci mathematical series to the
futures markets the past ten years has been fairly remarkable, considering the amount of homework and
trading discipline requisite in the approach. But the predictive accuracy and logic behind this technical
system, along with the method of checks and balances obtained from it, make the effort well worthwhile.
The Fibonnacci series is the basis of the "Elliot Wave" and various forms of Elliot theory. While Elliot
theory is espoused by many analysts, it is understood by very few. My own application of the Fibonnacci
series evolves from a strict subdivision of the futures market into three distinct categories: Pattern,
Time, and Ratio. I then require that each of these three categories have satisfied the essential framework
of the Fibonnacci series before establishing a position. If only two out of the three categories fulfill their
requirement, a position can be established, but the reliability factor is smaller and consequently one
should commit funds less aggressively.
The Fibonnacci Series, discovered by the Italian mathematician Leonardo de Pisa in the 14th centruy, is
as follows: 1,2,3,5,8,13,21,34,55,89,144,233,etc..., where each successive number in the series is the
sum of the previous two numbers. The ratio between successive numbers can be seen to approach .618,
the so called "Golden Mean" or "Golden Ratio" of ancient Greek architecture. The three important ratios
the series provides us with are .618, 1, and 1.618.