Ok, here’s an intro to Fib Time Zones (Cycles).
As we calculated sections of price ranges by fib ratios, we do the same with thing with time ranges. Price ratios are marked with horizontal lines, and time ratios are marked with vertical lines. We try to find where both price and time projections intersect.
This is just to a brief overview of the technique…reading the book will definitely help as there are many more examples and info to consider, and the reasoning behind it all. As well, the time frame momentum needs to be considered if/when price reaches those projections.
MT4’s Fibonacci Time Zone tool is perfect for this. Once you change the default settings from the fib number sequence to the ratio’s, you are ready to draw. Miner’s book really only covers corrections because trends involve more sets of projections and calculations which apparently is more difficult to do unless you have “The Software”…of course :rolleyes:
So, for Corrective patterns, we will need at least 3 sets of fibs again. Also, the minimum setup needs to exist meaning we need a reasonably assumed A & B after a trend. Again, colorizing the time fib sets is recommended.
Fib Set 1: Use the Time Zone tool and draw from the beginning to the end of the trend. This time fib is then moved “as is” so that the 0% is repositioned to the end of the trend…forward projecting the time length trend into the future (pink vertical lines).
Key levels are the 38.2 & 61.8% vertical lines for basic 3 section ABC corrections, and 100% for complex corrections.
Fib Set 2: This is thought of like the Alternate Price Projections (APP), but because this is about time, its called the Alternate Time Projection (ATP). This time fib is used to narrow down the rather wide time range between the 38 & 61.8% time range of feb set 1. With the time zone fib tool, draw from the end of wave 5 to the end of corrective wave A, and move it to B (Green vertical lines).
Key levels are 61.8, 100 & 161.8%
Fib Set 3: This time fib measures the time between recent low-low and recent high-high. If the time “rhythm” continues, the next low or high should complete in the same time. Draw a time fib from the last 2 most average lows, and then move to the last low.
Key level is 100%
The Time Target Zone: We now have 6 key dates as marked with the vertical fib time lines. Just like with the price projections, we look for dates that group close together.
The following chart is the H4 GBPUSD. I have marked both the price & time fib sets and circled the possible price target and time target for a C to reverse from…assuming I did it correctly…lol…which is projected to complete in 4 more bars (16 hours).
I have a short trade currently open using a trendline break, and I’m targeting where C could possibly end…again assuming it even tries to get there. We never know what price will do, but given the information we have so far, we work with it. I have a 30 pip loss, for a 100 pip gain.
Time to get back to work, lol. I have like five books to read so not much progress with this way of trading but for what I’ve been searching lately elliot waves are a very important part of trading along with fibonacci ratios, that being said by two different institutional traders.