Fibonacci Calculator

Calculator Copyight @ 2007, TradingOurWay Page 1

Please review the "Selecting prices" and Example worksheets for instructions

You may only enter Price data, Fibonacci percentages and RRR prices into the colored cells

SCONFibonacci Percentages

23.6% 38.2% 50.0% 61.8% 75.0% 100.0% 127.2% 161.8% 261.8% 425.0%

Wave (1) minus (2) is 3.61

1 8.62 Projected price targets for (3) Retracements2 5.01 5.86 6.39 6.81 7.24 7.72 8.62 9.60 10.85 14.46 20.35

A 1.38 Wave (A) minus (B) is 7.24

B 8.62 Projected price targets for (D) ExtensionsC 5.01 6.72 7.78 8.63 9.48 10.44 12.25 14.22 16.72 23.96 35.78

Reward to Risk Formula is (TP - EP) / (EP - SP)

5.87 Target #1 Price 9.48 Stop-Loss Price 4.87 RRR = 3.6Target #2 Price 12.25 RRR = 6.4Target#3 Price 16.72 RRR = 10.8

Stock Symbol

Pivot Points

Price at Pivot

Entry or Last Close

Reward Risk Ratio

Determining Price points to enter into the Fibonacci Calculator

1

2

3

4

5

6

Now we have all the price points we need to complete the Fibonacci calculator.

Price points:$1.38 A $8.62 B or 1 $5.01 C or 2$5.87 Entry or Last close $4.87 Stop$9.20 Target #1

$12.15 Target #2 $16.63 Target #3

$9.48 61.80%$12.25 100%$16.72 161.80%

$5.86 23.80%

First, we have to identify the points on the chart. Then enter them into the proper cells B8 and B9 for (1 to 2) retracements and B11, B12 and B13 for A to B to C) extensions. The calculator will then calculate the projected price tagets. The retracement projections can be used to either show the possible wave 2 to 3 move or the retracements or wave 1 to 2. While the extensions only show the possible wave C to D move. Thus providing for target points in both directions.

We will use SCON as of close 9-18-07 as our example. It is a stock that many traders have discovered in the last few weeks. We notice on the daily chart that SCON on the Daily chart shows an unbelievable 8 day run. We are now faced with the question of what are reasonable projections for target prices for a LONG trade? While at the same time we need to know the points of possible movement in the other direction.

We start with a weekly or monthly chart that shows this stock is capable of hitting much, much higher prices. However, this is highly unlikely in the next few years. That is about all we can get from the monthly chart because of the extreme price swing. So we move to the weekly chart that shows SCON is capable of much higher prices. Here is where we start our effort to determine possible target points.

   First draw on the chart horizontal Green lines to represent the previous Support/Resistance area. These are a “visual best guess” effort, and are not meant to be absolute points, but rather an area on the chart. Target #1 – $9.20, target #2 - $12.15, and target #3 - $16.63

    Next we drawn the last support area. The most recent low. We will use an area just below here as our worst case stop-loss point. I am going to choose $4.87 the low area of Feb 2007.

    Next we switch to a daily chart for a much closer inspection. The green lines we drew do not even show on the daily chart yet.

    It is at this point we want to select the 3 “Pivot” points. That is the previous low(A) $1.38 , the most recent high(B or 1) $8.62, and the most recent low (C or 2) $5.01

    Next we need to pick an entry point based on our trading style or strategy. This can vary greatly depending on your style. Personally, I look for a positive signal, such as 2 bullish days out of 3 trading days. Looking back over the last 12 days we have had 9 days where the close was lower than the open and 7 of those closed lower than the previous close. To me this is showing the Bears are still in control. I have set a buy at the close greater than $5.87. That’s just my style and probably isn’t yours. So pick your point of entry.

    The only thing left to determine are the target points. Remember we drew green lines on the weekly chart that indicated they may be reasonable targets. That’s where the Fibonacci calculator comes in handy. Problem is it presents you with many projections. What we are looking for is to see if any projections come close to the green lines we drew. As this will act as a confirmation for those points. The most popular Fibonacci projections used by Fibonacci traders are 61.8%, 100%, 127.2% and 161.8%

Fibonacci calculator shows we have a confluence between the drawn green lines and the Fibonacci extension projections:

Fibonacci calculator also shows the current pullback has retraced to the 23.8% area. This is not an unusual pullback for strong stocks.

When I started this exercise I had no preconceived notion that that the green lines drawn on the chart would align so closely with the Fibonacci extension and retracement for SCON. They will not always align this closely. When that happens you now have to decide whether to use support/resistance or the Fibonacci projections or skip this trade and move to the next candidate. Only you can decide if this is a method you want to learn how to use to determine price points for your trading.

Calculating Fibonacci Extensions

What is the target price? D

B

A C

To figure the potential target price for point D based on Fibonacci extension projections.The complete formula to find Point D = (C + ((B – A)) times Fibonacci percentage)Take the difference of points A and BMultiple that difference by the Fibonacci percentage

You determine the absolute value of the move from the beginning of the wave (A) to the end of the wave (B) then multiply it by the Fibonacci percentage. Then add or subtract the resulting value to the end of the wave (C)

The last step is to the result to point C when point B is greater than point A and we subtract the product from point C when point B is greater than point A

Calculating Fibonacci Retracements

What is the target price? 31

In this example 3 = (2 + (1 – 2)) times Fibonacci numbers

2 Now we simply take the difference of point 1 and 2Then we multiple that difference by the Fibonacci % move value

What is the target price? 3

1 = 8.62

2 = 5.01

You determine the absolute value of the move from the beginning of the wave (1) to the end of the wave (2) then multiply it by the Fibonacci percentage. Then add or subtract the resulting value to the end of the wave (2)

To figure the potential target price for point 3 based on Fibonacci projections.

Finally, we add the result to point 2 when point 2 is greater than point 1 and we subtract the product from point 2 when point 2 is greater than point 1

In this example, we will use the stock SCON as of 9-18-07 and its recent strong move up and its recent pullback. We will substitute the price points at the pivot point and calculte the values along wave C to D for the most popular Fibonaci projections 38.2%, 61.8%, 100% and 161.8%

3 @ 161.8% = 5.01 + ((8.62 - 1.38)* 1.618) = 16.72

3 @ 100% = 5.01 + ((8.62 - 1.38)* 1.00) = 12.25

3 @ 61.8% = 5.01 + ((8.62 - 1.38)* .618) = 9.48

3 @ 38.2% = 5.01 + ((8.62 - 1.38)* .381) = 7.78

Calculating Fibonacci Retracements

In this example 3 = (2 + (1 – 2)) times Fibonacci numbers

Now we simply take the difference of point 1 and 2Then we multiple that difference by the Fibonacci % move value

You determine the absolute value of the move from the beginning of the wave (1) to the end of the wave (2) then multiply it by the Fibonacci percentage. Then add or subtract the resulting value to the end of the wave (2)

To figure the potential target price for point 3 based on Fibonacci

Finally, we add the result to point 2 when point 2 is greater than point 1 and we subtract the product from point 2 when point 2 is greater than point 1

In this example, we will use the stock SCON as of 9-18-07 and its recent strong move up and its recent pullback. We will substitute the price points at the pivot point and calculte the values along wave C to D for the most popular Fibonaci projections 38.2%, 61.8%, 100% and 161.8%

@ 161.8% = 5.01 + ((8.62 - 1.38)* 1.618) = 16.72

@ 100% = 5.01 + ((8.62 - 1.38)* 1.00) = 12.25

@ 61.8% = 5.01 + ((8.62 - 1.38)* .618) = 9.48

@ 38.2% = 5.01 + ((8.62 - 1.38)* .381) = 7.78