Technical Analysis, Charts Drawings:
Fibonacci Timelines are analytical drawing tools that are based on the marked by a user trend line and the series of Fibonacci Ratios (percentages). In order to display the Fibonacci Timelines, a trend line is first drawn through the major resistance and major support. Then the horizontal distance between these two points (time distance) is divided by Fibonacci Ratios: 23.6%, 38.2%, 50.0%, 61.8% and 76.4%. Then, based on these time distances, the vertical lines are drawn on the right side of the latest time trend line point for distances that are equal to the previously calculated time distances.
In technical analysis, Fibonacci Timelines are used to highlight periods of time when the stock's (index's or other tradable commodity's) price trend is vulnerable to changes. Most technical analysts who work with Fibonacci tools assume that the trend is most vulnerable to reversals in time periods between the 38.2% and 61.8% lines. Many technical analysts use the Timelines in conjunction with other Fibonacci tools.
The chart below of the NASDAQ 100 index gives an example of a Fibonacci Timelines:
Chart 1: NASDAQ 100 chart with Fibonacci Arcs
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