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Do you use the 76.4% or 78.6% Fib retracement?


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#1 spielchekr

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Posted 01 February 2008 - 11:05 PM

78.6% is convention, but I do encounter 76.4% in the literature from time to time. I understand the differences in how they're derived (78.6% square root method vs. 76.4% inversion method).

I read an interesting thread ( http://www.forexfact...ead.php?t=58778 ) debating the two. For prices that tend to inflate/compound, I think 78.6% might make more sense. However, I wonder if 76.4% wouldn't make more sense when used in an oscillating indicator, since an oscillator perpetually inverts itself back and forth.

What are your thoughts? Thanks in advance.

#2 colion

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Posted 01 February 2008 - 11:29 PM

I'm in the 78.6 camp. However, asking which is better is like many other questions in the TA world (e.g., which indicator is better, which EW methodology is better, which .... ). Until someone takes the time to establish the statistics there is no way to know which is better. Choose your poison but other factors are probably more important. Bill

#3 The End

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Posted 02 February 2008 - 12:04 AM

If it get's past .618, I don't want to take the risk anymore. ...Scar tissue.

TE

I'm in the 78.6 camp. However, asking which is better is like many other questions in the TA world (e.g., which indicator is better, which EW methodology is better, which .... ). Until someone takes the time to establish the statistics there is no way to know which is better. Choose your poison but other factors are probably more important.

Bill


Bill,

IMHO, Cycle theory makes the most sense and Fibonacci, in cohoots with Hurst, has the ability to be a dynamic duo. AKA Jim Curry.

TE

Edited by The End, 02 February 2008 - 12:05 AM.

NONE of what I type should be taken as financial advice.

#4 Kimston

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Posted 02 February 2008 - 09:54 PM

Funny you should bring this up. Just yesterday I changed the default settings in my software for fib price and time retracements/projections. Original setting was .786 but I have found the .764 (inverse of .236) is a more common ratio in the markets if there's an overshoot of .618. For me, getting beyond .764 is where the risks become too high. For example, if I put on a trade based on a .618 retracement, I will typically put a stop slightly beyond the .764 level. If it goes to .786, I find most of the time a full retracement is coming. Kimston