Elliott Wave Junctures by Jeffrey Kennedy

Fibonacci — Relevant in More Ways Than One

Market: PHM Friday, April 20th, 2012

When R.N. Elliott wrote Nature’s Law, he explained that the Fibonacci sequence was the mathematical basis of the
Wave Principle. I believe that observation is equally true today. Furthermore, Fibonacci analysis can identify significant areas
of support and resistance for traders.

To illustrate the relevance of Fibonacci analysis today, let’s examine a few price charts of Pulte Group (PHM). Common Fibo-
nacci relationships between waves one and three are 1.618, 2.618 and 4.236. In PHM, wave iii (circled) rallied to just above
the point at which it equals a 2.618 multiple of wave i (circled). Also, wave v (circled) went on to achieve another important
Fibonacci relationship at 9.03 — the level at which wave five equals a .618 multiple of waves one through three. These are
not the only Fibonacci relationships evident. As different degrees of waves are examined, more Fibonacci relationships are
revealed.

With respect to trading, after extensive Fibonacci analysis is performed, clusters of Fibonacci support/resistance become
evident. And the more numerous and closely bound these clusters are, the greater the likelihood that prices will react to these
regions. Knowing where prices may turn is important because that allows traders to manage risk more effectively.

For further coverage of individual stocks, refer to the Prime Stocks Flash service edited by Wayne Stough.

PO Box 1618 • Gainesville, GA 30503 USA [email protected]

770-536-0309 • 800-336-1618 • FAX 770-536-2514 © 2012 Elliott Wave International
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PO Box 1618 • Gainesville, GA 30503 USA [email protected]

770-536-0309 • 800-336-1618 • FAX 770-536-2514 © 2012 Elliott Wave International
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PO Box 1618 • Gainesville, GA 30503 USA [email protected]

770-536-0309 • 800-336-1618 • FAX 770-536-2514 © 2012 Elliott Wave International