Page 55 - FINAL CFA I SLIDES JUNE 2019 DAY 4
P. 55
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 previous high, 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.
