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- Fibonacci and Gann Projections
- The system attempts to predict future turning points, pivots or valleys. These turning points are found by applying Fibonacci ratios to the swings. Time predictions are based on the zigzag indicator and Fibonacci ratios, as well as Gann square of nine calculations.
When using either Fibonacci-Gann Projections Change % or Fibonacci-Gann Retrace %, there are three numerical parameters you can change:
The first, wave %, denotes the retracement percentage.
The next value, Gann inc value, denotes the size of the Gann increment. This controls how many confirmed swing points to use. Confirmed swings are shown in blue.
The third, Gann increments (swing), specifies the required number of bars to the or left of the pivot peak or valley. A default of 1 would mean that a pivot peak is only required to have one lower bar on each side.
Types of Swing: confirmed and non-confirmed. A non-confirmed swing has not formed a peak or valley. Peaks and valleys are only created when the price completes the percentage retracement (using the value selected).
More detailed information on the Fibonacci and Gann Projections can be found in the October 2004 issue of Technical Analysis of Stocks and Commodities
(http://www.traders.com).
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- Fibonacci Arcs
Fibonacci Arcs are created by first drawing a trendline between two extreme points, i.e. trough and peak. Three arcs are generated at "Fibonacci Intervals" usually defined as 38.2%, 50% and 61.8% of the distance between a price maximum and minimum. They are centered on the second extreme point and intersect the trendline.
The interpretation of Fibonacci Arcs involves anticipating support and resistance as prices approach the arcs.
What are now known as "Fibonacci numbers" are said to be based upon observations of the Great Pyramid of Gizeh in Egypt by Italian mathematician Leonardo Fibonacci born around 1170 AD.
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- Fibonacci Fans
Fibonacci Fan lines take their name from their obvious fanlike appearance. They are generated by first drawing a trendline between two extreme points, i.e. trough and peak. Next, an "invisible" vertical line is drawn through the second extreme point. Three lines are then drawn from the first extreme point passing through the invisible vertical line with their slopes at the Fibonacci levels, usually 38.2%, 50.0% and 61.8%.
As the daily prices pass these three fans, one can make predictions about future price movements based upon the appearance of price resistance or support at these intersection points. When the prices hold at the fan line, there is support there. If they quickly move through the fan line, do not look for support until the next fan line is met.
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- Fibonacci Retracements
Fibonacci Retracements are displayed by first drawing a trendline between two extreme points, i.e. a trough and opposing peak. A series of horizontal lines are drawn intersecting the trendline at the Fibonacci levels.
After a significant price move in either up or down direction, prices will often give back a significant portion (if not all) of the original move. As prices retrace, look for support and resistance levels often occurring at or near the Fibonacci Retracement levels.
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- Fibonacci Time Series
Fibonacci Time Series is a series of vertical lines spaced at the Fibonacci intervals.
Use the Fibonacci Time Series to look for significant changes in price near the vertical lines.
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- Fisher Transform
The Fisher Transform indicator attempts to be a major turning point indicator and is based on John Ehlers' November 2002 Stocks and Commodities Magazine article, "Using The Fisher Transform."
With distinct turning points and a rapid response time, the Fisher Transform uses the assumption that while prices do not have a normal or Gaussian probability density function (that familiar bell-shaped curve), you can create a nearly Gaussian probability density function by normalizing price (or an indicator such as RSI) and applying the Fisher Transform. Use the resulting peak swings to clearly identify price reversals.
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- Force Index
Developed by Dr. Alexander Elder, the Force Index combines price movements and volume to measure the market. Unmodified Force Index results can be rather erratic, better results are achieved by smoothing with an moving average. A 2-day exponential moving average of the Force Index may be used to track the strength of buyers and sellers in the short term while a 13-day exponential moving average better measures the strength of intermediate cycles.
If the Force Index is above zero Elder would say, "the bulls are in control." A negative Force Index would then signal that "the bears are in control." If the Index remains close to zero neither side has control and no strong trends exist.
The greater the distance from zero, the stronger the signal. If the Force Index flattens out it indicates that either volumes are falling or large volumes have failed to significantly move prices. Either situation is likely to precede a reversal.
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- Forecast Oscillator
Developed by Tushar Chande, the Forecast Oscillator is is an extension of the linear regression based indicators. It is a percentage comparison of the price of an issue and the price as indicated by the Time Series Forecast Oscillator.
The oscillator is above zero when the forecast price is greater than the actual price. Conversely, it's less than zero if its below. When the forecast price and the actual price are the same the oscillator would plot as zero.
Prices that are persistently below the forecast price suggest lower prices ahead. Actual prices that are persistently above the forecast price suggest higher prices ahead.
It is calculated as follows:
(Close - Previous Time Series Forecast) * 100
(Close)
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- Four Percent Model
Developed by Ned Davis, the Four Percent Model is an easy to calculate and easy to analyze market timing tool utilizing the weekly close of the Value Line Composite Index.
A buy signal is generated when the index rises at least four percent from a previous value. A sell signal is generated when the index falls at least four percent.
Utilizing this approach to the stock market during the period from 1993 to 1998 would have a return of 241% versus the buy-and-hold approach which provided a return of 120%.
The Four Percent Model was developed by Ned Davis and popularized in Martin Zweig's book Winning on Wall Street.
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