Page 84 - FINAL CFA SLIDES DECEMBER 2018 DAY 4
P. 84

Session Unit 3:

                                                                                                             13. Technical Analysis

    LOS 13.f:  Explain how technical analysts use cycles, p.326


    LOS 13.g:  Describe the key tenets of Elliott Wave Theory and the importance of Fibonacci

    numbers., p.326



      Fibonacci numbers:               Starting with 0 and 1, we have (0, 1, 1, 2, 3, 5, 8, 13, 21, and so on).



      Elliott wave theorists believe that the ratios of Fibonacci numbers are useful for estimating
      price targets.



      e.g. a down leg can be 1/2 or 2/3 the size of an up leg, or

      a price target can be 13/8 of the previous high.






      Ratios of consecutive Fibonacci numbers converge to 0.618 & 1.618 as sequential #. get larger!



      These two values are commonly used to project price targets.
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