Great board! Thank you!

Fibonacci Gold
By John Townsend
Published: April 03, 2011
This article will examine the current up leg in gold price that originated in October 2008, present a study of the Fibonacci relationships of this price movement that are evident both in terms of price and time, and offer a projection of future price movement within the time frame suggested by the evidence.



We will begin with a simple weekly chart of the World Gold Index (XGLD) and employ a diagonal support trend line and three horizontal lines identifying price breakout levels. No doubt you will notice that price movement has been subdivided into three completed stages, each separated by a new break higher through a horizontal resistance line. And, current price is contemplating a move higher that would take it into a fourth stage of the up leg.

This first chart gives us a general concept of the shape, size, stages and elapsed time of this massive up leg in gold. This will be important to keep in your mind as the following charts will add considerable visual complexity to this price history.

I am going to present three charts that have taken various Fibonacci measurements into consideration and identified their location on the gold price chart. This first chart observes the Fibonacci relationships of price movement. Measurements are taken from price movement that results in a low, a high or a breakout. The second chart observes the Fibonacci relationships of lows, highs and breakouts measured in terms of time. The third chart attempts to consolidate and simplify the most significant details of the two preceding charts. This chart details both Fibonacci price movement and time on a single chart and offers a possible future outcome for price movement within a specified time frame.



click on image to see full size This image has been resized. Click on image to view full size.


Each Fibonacci measurement uses the base price of $681 which was the price of gold when this up leg began in October 2008.

I have retained the white horizontal lines that subdivide price movement into three complete stages, though admittedly you will have to look carefully to find them. They are identified as Level 1, Level 2 and Level 3.

Level 1 concluded with a bullish breakout that rallied 38.2% while Level 2 concluded with a breakout that climbed 23.6%. Price is presently at the Level 3 horizontal resistance level and should it breakout and also rise 23.6%, gold would be taken to somewhere around the $1639 area.

I found it interesting that most lows (but not all) were in Fibonacci relationship with a high that followed it. Also, literally every time price reached the diagonal trend line it turned out to be a significant Fibonacci price level for either a future local high or a return to the trend line. Finally, the Level 2 and Level 3 price levels were each affirmed with a Fibonacci relationship.


click on image to see full size This image has been resized.
Click on image to view full size.


This next chart considers various price landmarks and their Fibonacci relationships observed in terms of time. Unlike the previous chart that uses the $681 price of Day 1 as the basis of all observations, this chart notes the Fibonacci time relationships that exist using many different starting points, each of which is associated with either a low, high or breakout of a resistance level.

My impression of this Fibonacci time data is that it may be an even stronger determinant of significant price turning points than we observed in the previous chart of Fibonacci price data. This suggests to me that gold does indeed has strong cyclical and seasonal characteristics.

Nearly every significant low, high and breakout had a Fibonacci time relationship with another price landmark that followed. I was truly amazed at the intricate time relationships I found and I am sure I did not find them all.


click on image to see full size This image has been resized. Click on image to view full size.


This final chart is my attempt to synthesize the preceding charts, simplify and offer an hypothesis on future price movement. But rather than use the previous model that included significant consideration of the horizontal price levels that separate the three concluded stages, I decided to take a fresh look at price action and made some interesting discoveries.

Here I have subdivided price movement into four stages which are identified using four different colored rectangular borders. Each stage has a singular similarity - that being significant price action occurring at the Fibonacci 61.8% level of the rectangle, as measured from the baseline price of $681 to the top of the rectangle. We note that the height on one rectangle become the identified break out level within the next rectangle. And, each rectangle is separated by a drop in price movement that rejoins the long term trend line before beginning the next rectangle.

Future price movement suggests the current rectangle will top at $1639.

Various Fibonacci 50% time relationships are illustrated. If the February 2010 low is of large scale significance, it would be the 50% midpoint of gold's beginning in October 2008 and somewhere around May 23, 2011. Also, if gold should break out this week within the fourth rectangle that would correlate nicely with the breakout within the first rectangle, as the midpoint of this time frame is the beginning of the third rectangle. Finally, we are presently at the 50% mark of the time frame contemplated for the current fourth rectangle.

If you have comments, questions or new insights about the Fibonacci relationship of the current gold up leg and want to share them with me, just send me an email.

John Townsend

tsiTrader@gmail.com

http://www.gold-speculator.com/john-townsend/52134-fibonacci-gold.html

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with any short-term gyrations -

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and that the many rig failures could serve -
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Here's her info

helen bagley (yes the same cmkx bagley, lol)
first global
702-656-4919

they are a bit tricky to get info from because the SEC is up their ass but if you dont mind using your imagination and a little social engineering you can get the info you require.

good luck

robert

here you go:


http://www.investorshub.com/boards/addPersonMrk.asp?user=7537

apparantly nobody else follows the fibo system of investing

2 hours left in the MDC, lucky I signed up. I think you owe me a case of whiskey when you get home. I might just go raid your liquor cabinet while your gone, ha ha ha.

here's a link that has the guys info on it, i still have to find the chart or graph though.

http://home1.gte.net/simres/b1-model.htm

This is amazing stuff if your into mathematics. I'm going to try to track down the works from the guy who applied the numbers to trading and see if I can post his graph here.

Fibonacci's Mathematical Books
Leonardo of Pisa wrote 5 mathematical works, 4 as books and one preserved as a letter:
Liber Abbaci, 1202 but revised in 1228.
meaning The Book of the Abacus (or The Book of Calcuating). One of the problems in this book was the problem about the rabbits in a field which introduced the series 1, 2, 3, 5, 8, ... . It was much later (around 1870) that Lucas named this series of numbers after Fibonacci.
Practica geometriae, 1220.
A book on geometry.
Flos, 1225
Liber quadratorum, 1225
The Book of Squares, his largest book.
It was translated into English by L E Sigler and published as The Book of Squares in 1987, Academic Press. Another article about this book:
Leonardo of Pisa and his Liber Quadratorum by R B McClenon in American Mathematical Monthly vol 26, pages 1-8.
A letter to Master Theodorus, around 1225.
Theodorus was a philosopher at the court of the Holy Roman Emporer Frederick II.
There is a very readable outline of the problems in the letter to Master Theodorus in:
Fibonacci's Mathematical Letter to Master Theodorus A F Horodam, Fibonacci Quarterly 1991, vol 29, pages 103-107.

The Fibonacci Series
In Fibonacci's book he introduces a problem for his readers to use to practice their arithmetic:-
a pair of rabbits are put in a field and, if rabbits take a month to become mature and then produce a new pair every month after that, how many pairs will there be in twelve months time?
He assumes the rabbits do not escape and none die. The answer involves the series of numbers:
1, 1, 2, 3, 5, 8, 13, 21, ...
but it was the French mathematician Edouard Lucas (1842-1891) who gave the name Fibonacci numbers to this series and found many other important applications of them.

"Algorithm"
Earlier the Persian author Abu Abd Allah, Mohammed ibn Mûsâ al-Khowârizmî (usually abbreviated to Al-Khwarizmi or, more accurately, Al-Khowârizmî) had written a book which included the rules of arithmetic for the decimal positional number system, called Kitab al jabr w'al-muqabala (Rules of restoration and reduction) dating from about 825 AD. D E Knuth (in the third edition of his "Fundamental Algorithms", not in earlier ones) gives the full name above and says it can be translated as Father of Abdullah, Mohammed, son of Moses, native of the town of Al-Khowârizmî. He was an astromomer to the caliph at Baghdad (now in Iraq).

Al-Khowârizmî is the region south and to the east of the Aral Sea around the town now called Khiva (or Urgench) on the Amu Darya river. It was part of the Silk Route, a major trading pathway between the East and Europe. In 1200 it was in Persia but today is in Uzbekistan, part of the former USSR, north of Iran, which gained its independence in 1991.
Prof Don Knuth has a picture of a postage stamp issued by the USSR in 1983 to commemorate al-Khowârizmî 1200 year anniversary of his probable birth date.
From the title of this book Kitab al jabr w'al-muqabala we derive our modern word algebra.
The Persian author's name is commemorated in the word algorithm. It has changed over the years from an original European pronunciation and latinisation of algorism. Algorithms were known of before Al-Khowârizmî's writings, (for example, Euclid's Elements is full of algorithms for geometry, including one to find the greatest common divisor of two numbers called Euclid's algorithm today).
The USA Library of Congress has a list of citations of Al-Khowârizmî and his works.
Our modern word "algorithm" does not just apply to the rules of arithmetic but means any precise set of instructions for performing a computation whether this be
a method followed by humans, for example:


a cooking recipe;
a knitting pattern;
travel instructions;
a car manual page for example, on how to remove the gear-box;
a medical procedure such as removing your appendix;
a calculation by human computors : two examples are:

William Shanks who computed the value of pi to 707 decimal places by hand last century over about 20 years up to 1873 - but he was wrong at the 526-th place when it was checked by desk calculators in 1944!
Earlier Johann Dase had computed pi correctly to 205 decimal places in 1844 when aged 20 but this was done completely in his head just writing the number down after working on it for two months!!
or mechanically by machines (such as placing chips and components at correct places on a circuit board to go inside your TV)
or automatically by electronic computers which store the instructions as well as data to work on.

The Decimal Positional System
The system that Fibonacci introduced into Europe came from India and Arabia and used the Arabic symbols 1, 2, 3, 4, 5, 6, 7, 8, 9 with, most importantly, a symbol for zero 0.
With Roman numbers, 2003 could be written as MMIII or, just as clearly, it could be written as IIIMM - the order does not matter since the values of the letters are added to make the number in the original (unabbreviated) system. With the abbreviated system of IX meaning 9, then the order did matter but it seems this sytem was not often used in Roman times.
In the "new system", the order does matter always since 23 is quite a different number to 32. Also, since the position of each digit is important, then we may need a zero to get the digits into their correct places (columns) eg 2003 which has no tens and no hundreds. (The Roman system would have just omitted the values not used so had no need of "zero".)
This decimal positional system, as we call it, uses the ten symbols of Arabic origin and the "methods" used by Indian Hindu mathematicians many years before they were imported into Europe. It has been commented that in India, the concept of nothing is important in its early religion and philosophy and so it was much more natural to have a symbol for it than for the Latin (Roman) and Greek systems.

Roman Numerals
The Numerals are letters
The method in use in Europe until then used the Roman numerals:
I = 1,
V = 5,
X = 10,
L = 50,
C = 100,
D = 500 and
M = 1000
You can still see them used on foundation stones of old buildings and on some clocks.
The Additive rule
For instance, 13 would be written as XIII or perhaps IIIXX. This is reflected in the Roman language of Latin where 23 is spoken as tres et viginti which translates as three and twenty. You may remember the nursery rhyme Sing a Song of Sixpence which begins
Sing a song of sixpence
A pocket full of rye
Four and twenty blackbirds
Baked in a pie...
Above 100, the Latin words use the same order as we do in English, so that whereas 35 is quinque et triginta (5 and 30), 235 is ducenti triginta quinque (two hundred thirty five).
In the simplest system, using addition only, 99 would be 90+9 or, using only the numbers above, 50+10+10+10 + 5+1+1+1+1 which translates to LXXXXVIIII and by the same method 1998 would be written by the Romans as MDCCCCLXXXXVIII.


The subtractive rule
The Roman language (Latin) also uses a subtraction principle so that whereas 20 is viginti 19 is "1 from 20" or undeviginti. This is also reflected in Roman numerals. This abbreviation makes the order of letters important. So if a smaller value came before the next larger one, it was subtracted and if it came after, it was added.
For example, XI means 10+1=1 (since the smaller one comes after the larger ten) but IX means 1 less than 10 or 9.
But 8 is still written as VIII (not IIX). The subtraction in numbers was only of a unit (1, 10 or 100) taken away from 5 of those units (5, 50 or 500 or from the next larger multiple of 10 (10, 100 or 1000).

Using this method, 1998 would be written much more compactly as MCMXCVIII but this takes a little more time to interpret: 1000 + (100 less than 1000) + (10 less than 100) + 5 + 1 + 1 + 1.
Note that in the UK we use a similar system for time when 6:50 is often said as "ten to 7" as well as "6 fifty", similarly for "a quarter to 4" meaning 3:45. In the USA, 6:50 is sometimes spoken as "10 of 7".


Look out for Roman numerals used as the date a film was made, often recorded on the screen which gives its censor certification or perhaps the very last image of the movie giving credits or copyright information.
Arithmetic with Roman Numerals
Arithmetic was not easy in the Roman system:


CLXXIIII added to XXVIII is CCII
CLXXIIII less XXVIII is CXXXXVI

Fibonacci's Mathematical Contributions
Introducing the Decimal Number system into Europe

He was one of the first people to introduce the Hindu-Arabic number system into Europe - the positional system we use today - based on ten digits with its decimal point and a symbol for zero:

1 2 3 4 5 6 7 8 9 . and 0

His book on how to do arithmetic in the decimal system, called Liber abbaci (meaning Book of the Abacus or Book of Calculating) completed in 1202 persuaded many European mathematicians of his day to use this "new" system.
The book describes (in Latin) the rules we all now learn at elementary school for adding numbers, subtracting, multiplying and dividing, together with many problems to illustrate the methods:


1 7 4 + 1 7 4 - 1 7 4 x 1 7 4 ÷ 28
2 8 2 8 2 8 is
----- ----- -------
2 0 2 1 4 6 3 4 8 0 + 6 remainder 6
----- ----- 1 3 9 2
-------
4 8 7 2
-------

Fibonacci
He called himself Fibonacci [pronounced fib-on-arch-ee or fee-bur-nutch-ee] short for filius Bonacci.

There are a couple of explanations for the meaning of Fibonacci:
Fibonacci is a shortening of the Latin "filius Bonacci", which means "the son of Bonaccio", since his father's name was Guglielmo Bonaccio. Fi'-Bonacci is like the English names of Robin-son and John-son. But (in Italian) Bonacci is also the plural of Bonaccio; therefore, two early writers on Fibonacci (Boncompagni and Milanesi) regard Bonacci as his family name (as in "the Smiths" for the family of John Smith).
Fibonacci himself wrote both "Bonacci" and "Bonaccii" as well as "Bonacij"; the uncertainty in the spelling is partly to be ascribed to this mixture of spoken Italian and written Latin, common at that time.
Others think Bonacci may be a kind of nick-name meaning "lucky son" (literally, "son of good fortune").
Other names
He is perhaps more correctly called Leonardo of Pisa or, using a latinisation of his name, Leonardo Pisano. Occasionally he also wrote Leonardo Bigollo since, in Tuscany, bigollo means a traveller.
We shall just call him Fibonacci as do most modern authors, but if you are looking him up in older books, be prepared to see any of the above variations of his name.

Who was Fibonacci?
The "greatest European mathematician of the middle ages", his full name was Leonardo of Pisa, or Leonardo Pisano in Italian since he was born in Pisa (Italy), the city with the famous Leaning Tower, about 1175 AD.
Pisa was an important commercial town in its day and had links with many Mediterranean ports. Leonardo's father, Guglielmo Bonacci, was a kind of customs officer in the North African town of Bugia now called Bougie where wax candles were exported to France. They are still called "bougies" in French, but the town is a ruin today says D E Smith (see below).

So Leonardo grew up with a North African education under the Moors and later travelled extensively around the Mediterranean coast. He would have met with many merchants and learned of their systems of doing arithmetic. He soon realised the many advantages of the "Hindu-Arabic" system over all the others.

D E Smith points out that another famous Italian - St Francis of Assisi (a nearby Italian town) - was also alive at the same time as Fibonacci: St Francis was born about 1182 (after Fibonacci's around 1175) and died in 1226 (before Fibonacci's death commonly assumed to be around 1250).

This link is great!


http://www.omatrix.com/EAS/fibo.htm


"Description
It is generally accepted by market technicians that Fibonacci numbers define important market cycles and so many technical indicators are calculated using Fibonacci numbers or some factor of a Fibonacci number as lookback periods. In addition these numbers can be used to make projections of future price action and predict support and resistance levels. To determine the Fibonacci series the series starts with the numbers 1 and 2. fibo makes it easy to determine a Fibonacci number or to construct a series of such numbers. Each successive number in the series is the sum of the prior two numbers. Thus the next number is 1+2=3, followed by 2+3=5, 5+3=8, 8+5=13, etc. "

Here's some fibo analysis:

http://www.hedge-hog.com/hhu/MARK/MC1117.html
Market Analysis --November 17, 2002

Last week we finished with: " It's just a matter of time now until the buyers get the fever and start moving the market up. Stock is now in strong hands (http://www.hedge-hog.com/hhu/hhua.html) and the strong hands will be ever ready to dole it out to our weak hands and use a lot hype to make it all happen. That's how the game is played. At any rate a 90 day movement upwards to sideways from the October 2002 low is a fairly good bet at the present time."

So, the Elliott Wave class is now in session. This week, students, we examine the DOW:



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Chart by Bigcharts.Com (TM)

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So far there's an ABC in place. Can you see it? From 7177 to 8580 was a nice A wave. Then we pulled back to 8161. We then moved up to 8841. Then we pulled back to 8237. We are now moving up and what's the target? 8841? 9129? 9749?

Why these numbers? Well 8841 is the last peak. Then we would be doing a double top or failed 5th Elliott wave. If we surpass that then 9129 would be a target for the completion of a wave 5. And if the the wave 5 really has a lotta spunk, then 9749 could be a target. OR. We could be doing an ABC where the A went from Oct. 11 to Nov. 6, the B went from Nov. 7 to Nov. 13 and the C is currently underway. We are merely looking at support/resistance at this point in time.

If we look at our Gann wheel, we get the following numbers from 7177: 8280, 8570, 8870, 9170, 9330, 9470, 9780. Of those numbers, we appear to have used 8570. 9129 might be related to 9170 and 9749 might be related to 9780. Related? Gann didn't have a computer. He did it all with geometry. Let's give the guy some leeway.

And if we look at Fibo numbers: 8161 was NOT a 38% pullback from 8580. 9028 would be a target from the the 8161 pullback. 8208 would be a pullback target from the 8841 high if the market does soften here. If 8208 is hit, then upside targets would be 9236 or 9872. So Fibo numbers are not in play here thus far. That means we might be in a diagonal wave. It can still be 1 3 5, but it's not IMPULSE. If it's not impulse, it's CORRECTIVE. If it's corrective, it means the upside is limited and there's more consolidation in sight and that's the explanation which makes the most sense.

There's this IRAQI thing looming in front of us. There's the KYOTO accord troubling Canada. And there's this matter of regaining credibility since Wall Street has LIED to us. The type of Elliott Waves we get will be determined by the type of group behavior we get. That's what old Ralphie was trying to tell us 70 or 80 years ago.

I'm now in the money at 10th and moving up. Trying to end up in 1.618th place ha ha ha ha

I am now in 11th and moving up fast ha ha ha ha ha

I joined the membership thing tonight and am going to pass you by month end. ha ha ha. Watch me go!!!!!!!!!!!!!

Barb did.
I tried to figure the Fibo into playing the sega last night, it didn't work. Any suggestions on how to do that?

JR

did I pay for that upgrade?

Did you notice the hotsheet today? I quit!!!! Tell you in the AM

Look even Matt is thinking in Fibo's

http://www.investorshub.com/boards/read_msg.asp?message_id=650289

JR

how do I use 1.618 to help my trading?

Me too. I even won some sort of contest that night ha ha ha
JR

Glad to see you sobered up <g>.

I am 1.618 X more powerful now that I am a premium member hahaha

Also I note that it is only $130 thats only $220 Canadian!!!!!

I'll take the Lifetime hold the mayo, extra tomatoe, large fries and a diet coke.

JR

ps. ha ha ha

Well buck up buddy ha ha ha.

JR

ps. if you notice when you pay for my membership, the canadian exchange rate is $1.6180339887498949 eerie isn't it? ha ha ha

If he's a good boy and gives me a drive home in the limo tonight I'll but his membership for him, LOL.

Robert

True, I was grandfathered in (member since 2000), so only cost me $50. Early bird....LOL. Visit the BTS board sometime. Try to keep quality posts going over there.

Yes I am going to upgrade ha ha ha. I'll get to it as soon as I sober up in 2003.

You gotta realize that for the $160 that is about $275 canadian and I could buy a lot of wine for that money hahaha.

JR

Happy new year to you also. Heck, spend some money on the new year and join Ihub premium. Special membership prices right now, and -imo- money well spent.

Once again.... Happy New Year!!!!!

JR
(i only get a few posts a day, I got to make the most of them)

Just trying to support the local boys ha ha ha.

The whole thing still amuses and amazes me but it sure seems to make sense. I can't even balance my check book but I will try to use the 1.6..... in my beer ratio tonight.

JR

Hey thanks for the publicity JR.

For those interested Fibo numbers can also be employed to design some of the most effective wagering strategies in the science of gambling. Once you start reading about the concept it is remarkable how ordered all of the random events in life can become.
I've never used it to trade personally, but there are some who swear by it as a system.

Robert

Cool new thread!

Interesting, Thanks for the lesson.