Fibonacci Time Zones

Technical Analysis, Charts Drawings:

Fibonacci Time Zones

Description

Fibonacci Time Zones is an analytical drawing tool on stock charts that is similar to the Fibonacci Timelines, but constructed purely on the sequence of the Fibonacci Numbers. The series of Fibonacci numbers is: 1, 2, 3, 5, 8, 13, 21, 34, 55 ... where the next number is always calculated as a sum of the previous two numbers. After a user marks a time period (it could be a trend line) on the charts, a series of vertical lines that are equivalent to the marked time period multiplied by the Fibonacci numbers is drawn on this chart. These vertical lines represent Fibonacci Time Zones.

Technical analysis assumes that in the same way as seen in nature, when the price of the stock (index or other tradable commodity) moves close to the vertical time zone's line, the price is vulnerable to radical changes in its trend, thus revealing periods of potential support and resistance. The difference between Fibonacci Timelines and Time Zones is that while Timelines can be used in the short-term (not far from the market trend), Tome Zones enable one to see and predict sensitive periods farther from the base point (market trend).


The chart below of the NASDAQ 100 index gives an example of a Fibonacci Timelines:

Chart 1: NASDAQ 100 chart with Fibonacci Arcs

By V. K. for MarketVolume.com