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  Fibonacci Stock Price Wave Technical Analysis: How Does It Work?


For people whose work or job is not related in anyway to finance, marketing, or business, stocks and stock prices are simply those barely understandable numbers and figures they see on their television screens whenever they pass by a TV channel showing a business news program.  But for traders and marketers, stock prices and their changes are everything.  After all, monitoring stock price changes in the stock market is their primary concern.  That’s why many traders are taking stock price wave technical analysis seriously, and they use a variety of method in making their analyses.  One of these methods is the Fibonacci stock price wave technical analysis.

But before we go on talking about Fibonacci stock price wave analysis, let’s first know what stocks are.  A stock is a kind of security that denotes one’s ownership in a corporation.  It is also indicative of one’s share in the assets and earnings of a particular corporation.  Stocks are also commonly referred to as shares or equities.

Fibonacci Stock

Many corporations, especially the large ones, place their stocks in the stock market to be sold.  These stocks are subjected to prices that change continuously, and these stock price changes are the main concern of traders.  Traders often use various technical analysis methods and tools to analyze and predict stock market price changes, and one of these methods is the Fibonacci stock price wave analysis.

Fibonacci stock price wave analysis is basically a technical analysis method that uses the Fibonacci numbers and principles.  The stock prices in Fibonacci stock price wave analysis are plotted in a chart and their changes take the form of waves.  The fluctuations or the changes of these Fibonacci stock price waves are the one analyzed by traders.  For their Fibonacci stock price wave analysis, they would use Fibonacci tools and indicators, the most commonly used of which are the Fibonacci stock price retracement lines.

Retracements refer to the sudden reversals from a major upward or downward stock market price trends, and various levels of retracements means many things in Fibonacci stock price wave analysis.  The most common Fibonacci stock price retracement levels used in Fibonacci stock price wave analysis are the 0.618, 0.382, and 0.5 retracement levels.  A 0.618 Fibonacci stock price retracement is often indicative of a major change in market trend while a 0.382 Fibonacci stock price retracement is often indicative of a continuation of the existing market trend.  A 0.5 Fibonacci stock price retracement, on the other hand, implies indecision.

Another occurrence that most traders pay particular attention to in Fibonacci stock price wave analysis is confluences.  A confluence occurs when Fibonacci projections made on different time frames yields a similar result.  Confluences are indicative of the strength of a particular projection.  Confluences in Fibonacci stock price wave analysis make a particular projection stronger or its probability of happening higher.

There are a lot of other indicators, tools and methods used by traders in Fibonacci stock price wave analysis.  And aside from Fibonacci stock price retracements and confluences, there are a lot of other occurrences in Fibonacci stock price wave analysis that traders look for.  The scope of this brief article, however, does not include a discussion of all the methods, tools, indicators and occurrences used and observed in Fibonacci stock price wave analysis.  Should you need to learn more about particular Fibonacci stock price wave analysis tools or methods, there are a lot of websites that offers in depth information about these subjects.  There are also a lot of books and software products that can help you in Fibonacci stock price wave technical analysis.

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