Page 220 - THE MARKET WHISPERER

216 PART 7 - Indicators: The Trader’s Compass
Examining the MACD on the Same NTES Chart

The result is interesting, without a doubt, especially if we compare the
MACD buy and sell instructions each time the 26-12 EMA cuts across the
9EMA with the buy and sell readings for the RSI. Food for thought: will
integrating both these indicators improve the outcome?

Fibonacci Sequence

The Italian mathematician Leonardo Fibonacci (1170 – 1250) wished to
find a mathematical depiction for the way rabbits reproduce. From his
experiments, he created a mathematical sequence bearing his name. The
sequence is as follows: 1, 2, 3, 5, 8, 13, 21, 34 and so on. The sequence is
based on several interesting rules: from the third number on, each new
number is the sum of the two previous numbers; from the fifth number on,
the ratio of any number to the preceding number is approximately 1.618,
and for any number and the number following it, the ratio is 0.618.

So what is fascinating about 1.618? It is known as the “golden ratio,”
and amazingly, it can be found in multiple areas of our lives, from natural
phenomena to artistic works, and all the way to the behavior of stock
prices.

SMART Does Fibonacci really impact your stocks? In my opinion, this
MONEY is no more than a self-fulfilling prophecy, but since it is so, I
have no choice but to give the indicator its rightful place.