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Example of Fibonacci Cluster "Quatro" Software below...
Leonardo Fibonacci, a mathematician in the 11th century A.D. found a numerical sequence, while studying the Great Pyramid of Gizeh. The fascinating concept that Fibonacci discovered is that as the sequence of numbers proceeds, each number in the sequence is 1.618 times the preceding number and .618 of the next number. (1,2,3,5,8,13,21,34,55,89,144,233,377,610,987 ect.). This sequence of numbers is believed to occur throughout nature.
WHY THIS SOFTWARE
After working with Fibonacci numbers for more than 20 years, the usual techniques for computing retracement levels left much to be desired. The technique of using multiple swing to pinpoint Support/Resistance solves the problem by providing a high probability of stopping a market advance (resistance) and halting a market (support) enough so, that a trader, with tools at his disposal can make effective use of the natural numbers.
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FIBONACCI CLUSTERS
This program can be installed in any IBM compatible computer using Microsoft Windows Platform. The program is designed to give you (4) outputs for either Support Levels or Resistance Levels at any one time.
As every trader knows all trend moves starts from a SIGNIFICANT HIGH POINT (SHP). or a SIGNIFICANT LOW POINT (SLP). While the market is trending away from these SHP's and SLP's there will be "normal" corrections (pit stops) going contrary to the main trend. It is these "normal" corrections (pit stops) we need to "capture" in order to generate our Support/Resistance levels.
TO FIND RESISTANCE
For example, the market has made a SIGNIFICANT HIGH POINT (SHP). Now the market proceeds to correct, contrary to the main trend and puts in a series of SWING HIGH POINTS (SH), finally registering a SIGNIFICANT LOW POINT (SLP). Observing the chart, you can easily identify the highest high (SHP) and the lowest low (SLP) in the trend and a series of SWING HIGHS (SH) that fall between the two extreme points. You need to identify these two prices.
TO FIND SUPPORT
For example, the market has made a SIGNIFICANT LOW POINT (SLP). Now the market proceeds to rally, contrary to the main trend and puts in a series of SWING LOW POINTS (SL), finally registering a SIGNIFICANT HIGH POINT (SHP). Observing the chart, you can easily identify the highest high (SHP) and lowest low (SLP) in the trend and a series of SWING LOWS (SL) that fall between the two extreme points. You need to identify these two prices. Confluence gives you unlimited possibilities. Some technicians have determined that by combining multiple trends with Fibonacci Projections, that produce the same (or very similar) numbers, the Support/Resistance level is thereby strengthened, making the results more reliable. The greater the confluence the more significant the number. For example a .382 number from one trend when matching to a .618 number to another trend with, for example a .50 number from a third trend, will produce a more powerful number. There is validity to this concept. Our method takes it one step further by allowing you to calculate from multiple trends (if you wish), and by our method of projecting Support and Resistance by identifying multiple swings within both those trends.
Fibonacci Numbers Applied to Technical Analysis -- Many technicians use Fib numbers when trying to determine Support and Resistance, and commonly use, .382, .50, .618 retracements. Commonly though, a .382 retracement from a trend move to imply a continuation of the trend. A .618 retracement implies that a trend change may be in the making. Many such rules have been adopted by technicians. Our approach is different in that WE DO NOT USE FIB RETRACEMENT NUMBERS TO DETERMINE THE TREND.
Our Long Term trend is determined by a simple "89" period Moving Average. The moving average is the literal battle ground between the bulls and bears.
Our use of Fibonacci Cluster QUATRO will determine Support and Resistance in the direction of the main trend (which is always determined by prices either above or below the long term moving average), -- what we call our MAIN 89 LINE.
Most charting packages will enable you to create a simple 89 period moving average. We encourage you to look at the market in this way.
Caution: This indicator while extremely useful, can never take the place of sensible money management, good entry/exit rules, that every winning trader must have to compete against the 'floor' market makers. Fibonacci Clusters have been effectively integrated into my FIBONACCI IMPULSE STRATEGIES SYSTEM, especially with the use of my SQUAT BAR Indicator. Trades pivy to its rules and its software can make trading even more effective.