Fibonacci Time Zones

From Forexpedia

Fibonacci time projection days are days on which a price event is supposed to occur. Time projection analysis is not lagging but is of forecasting value. Trades can be entered or exited at the price change rather then after the fact. The concept is dynamic. The distance between two turning points is seldom the same, and time projection days vary, depending on larger or smaller swing sizes of the market price pattern. This base for drawing this shape is 2 critical points: two highs, two lows or a low and a high. Fibonacci levels are projected into the future based on those points and at this time it is impossible to say whether those levels mark peaks or valleys. If price is declining or rising approaching a given Time Projection level, it is likely this level will mark an end or a pause of a particular trend. It is always recommended to combine Time Projection with other Fibonacci tools for more dependable signals.

Fibonacci numbers are a sequence of numbers in which each successive number is the sum of the two previous numbers.

Fibonacci Time Zones are a series of vertical lines. They are spaced at the Fibonacci intervals of 1, 2, 3, 5, 8, 13, 21, 34, etc. The interpretation of Fibonacci Time Zones involves looking for significant changes in price near the vertical lines.

Fibonacci time zones are used in the Fibonacci time projection, one of the four most commonly used of the Fibonacci studies for technical analysis. A Fibonacci time zone is generated by first taking some time interval on a market's chart as a base increment of time, anywhere from one hour to one day. The most useful Fibonacci time zones are generated by choosing a base interval described by the time between two market bottoms or tops. The base interval is then multiplied by the golden ratio, 1.618, in order to determine the length of time from the end of the base interval to the first Fibonacci time zone. Future Fibonacci time zones are generated by multiplying each successive interval between Fibonacci time zones by 1.618.

Fibonacci time zones are, in theory, the points at which large market events can be expected, from the reversal of a current price trend to a large change in price in the direction of the trend. In practice, Fibonacci time zones do have a large measure of predictive power (something like 70%), but on occasion large price events can occur between Fibonacci time zones, even though the time zones usually still correspond with price events of some size. Because of this occasional inaccuracy, Fibonacci time zones and Fibonacci time projection should only be used as guidelines, and should also only be used in conjunction with other technical analysis tools.