Fibonacci time zone is altogether a different kind of technical indicator. The times zones are what the name says, add Fibonacci to the name and once again those are what the name say. And what the name says is time zones based out of Fibonacci services of numbers.
All other technical indicators analyze the price-action on time axis. Fibonacci time zone is one indicator which has no place for the price in its calculation. Read ahead and though this statement is correct but later we will prove that this statement is not 100% correct - 99.99%, yes. But then that 0.01% makes a HUGE difference.
Though now you already know what a Fibonacci series of numbers is but let's have a quick recap for the ready reference. As we have seen that Fibonacci series starts with 0 and 1 and then extended by adding the two prior numbers to get the next. By doing so it comes up as follows:
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987... and so on.
Each number in the series is the sum of two prior numbers.
Fibonacci time zones are nothing but vertical lines at distances to these numbers. These lines divide your chart in zones with the width equivalent to Fibonacci numbers. Let's say you are working with daily chart, then the zones will have widths as follows:
1st time zone = 1 day
2nd time zone = 1 day
3rd time zone = 2 days
4th time zone = 3 days
5th time zone = 5 days
6th time zone = 8 days
7th time zone = 13 days
8th time zone = 21 days
.... and so on. If you are working with hourly chart then you can replace the "days" by "hours".
During a downtrend, click on an important low or trough and drag the mouse vertically up to a desired height and click again. You will see vertical lines defining the zones according to Fibonacci numbers come up on your chart.
During an uptrend, click on an important peak and drag the mouse vertically down to a desired depth and click again. You will see vertical lines defining the zones according to Fibonacci numbers come up on your chart.
What the Fibonacci Time Zones Signify
Well, the beginning of a new time zone is considered to be an area for the beginning of a major market movement. Most of the times it is expected to bring consolidation or reversal but you should mainly take it as an area to expect a major market move.
Is price not important for Fibonacci Time zones?
You have seen that we are just breaking the chart in time zones and price has not at come into the picture. But can we expect to forget about the price? Are these time zones completely independent of the price action? Well, on the face value it looks so but as mentioned above, it is not 100% correct. Price does come into the picture. But it comes into the picture only once - at the very beginning - the point of start from where you wish to break your chart into these zones.
The essence is that the starting point, from where you wish to draw the Fib time zones, needs to be an important low or high during that period.
some images that explains the reversal or continuation condition of market direction
All other technical indicators analyze the price-action on time axis. Fibonacci time zone is one indicator which has no place for the price in its calculation. Read ahead and though this statement is correct but later we will prove that this statement is not 100% correct - 99.99%, yes. But then that 0.01% makes a HUGE difference.
Though now you already know what a Fibonacci series of numbers is but let's have a quick recap for the ready reference. As we have seen that Fibonacci series starts with 0 and 1 and then extended by adding the two prior numbers to get the next. By doing so it comes up as follows:
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987... and so on.
Each number in the series is the sum of two prior numbers.
Fibonacci time zones are nothing but vertical lines at distances to these numbers. These lines divide your chart in zones with the width equivalent to Fibonacci numbers. Let's say you are working with daily chart, then the zones will have widths as follows:
1st time zone = 1 day
2nd time zone = 1 day
3rd time zone = 2 days
4th time zone = 3 days
5th time zone = 5 days
6th time zone = 8 days
7th time zone = 13 days
8th time zone = 21 days
.... and so on. If you are working with hourly chart then you can replace the "days" by "hours".
During a downtrend, click on an important low or trough and drag the mouse vertically up to a desired height and click again. You will see vertical lines defining the zones according to Fibonacci numbers come up on your chart.
During an uptrend, click on an important peak and drag the mouse vertically down to a desired depth and click again. You will see vertical lines defining the zones according to Fibonacci numbers come up on your chart.
What the Fibonacci Time Zones Signify
Well, the beginning of a new time zone is considered to be an area for the beginning of a major market movement. Most of the times it is expected to bring consolidation or reversal but you should mainly take it as an area to expect a major market move.
Is price not important for Fibonacci Time zones?
You have seen that we are just breaking the chart in time zones and price has not at come into the picture. But can we expect to forget about the price? Are these time zones completely independent of the price action? Well, on the face value it looks so but as mentioned above, it is not 100% correct. Price does come into the picture. But it comes into the picture only once - at the very beginning - the point of start from where you wish to break your chart into these zones.
The essence is that the starting point, from where you wish to draw the Fib time zones, needs to be an important low or high during that period.
some images that explains the reversal or continuation condition of market direction
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| several indications to confirm the order |
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| several indications to confirm the order |
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