Fibonacci profit objectives
by Joe DiNapoli
Anyone who has been involved in the market for long has probably heard about Fibonacci numbers
and ratios. We know they somehow mysteriously affect the market; however, most of us resist trying to
understand how they work. I resisted because I thought that Fibonacci numbers, wave analysis and related
systems were very difficult concepts to learn.
Eventually, my desire to better understand the market and to win bigger overcame my prejudice. I quickly
discovered that applying Fibonacci techniques to the market is not very difficult, and that a trader does
not need to be an Elliott Wave technician to apply Fibonacci concepts.
The Fibonacci number series (1, 2, 3, 5, 8, 13, 21, etc.) and the resulting Fibonacci ratios (0.146, 0.382,
0.5, 0.618, 1.0, 1.382, 1.5, 1.618, 2.618, etc.) are the heart of Fibonacci analysis. My technique of using
Fibonacci expansion analysis uses only three ratios: 0.618, 1.0 and 1.618. With these three ratios, I
calculate logical profit objectives. I can ignore most of the other ratios, as well as the entire number series
from which those ratios are derived.