My Latest Research Into Long-Term Fibonacci Relationships

One of the questions that is often asked is whether or not Fibonacci time and price analysis works on all time frames. The answer is YES. I have worked on monthly, weekly, daily and intraday charts, all the way down to a two-minute chart! This method has value no matter what time frame it is applied to. In most of my recent commentaries on the website, I have been focusing on shorter-term setups that are calculated using 60-minute, 15-minute or five-minute charts. I've been asked to take a look at the bigger picture and to show you how this same methodology applies. Let's take a look at one of your favorite markets...the Nasdaq 100 (NDX | Quote | Chart | News | PowerRating) cash index! 

First, let's look at some price work that was set up on the Nasdaq 100 (NDX1 | Quote | Chart | News | PowerRating) weekly chart. Here I ran all of the possible retracements, price extensions and price projections on this chart. There were quite a few "price clusters" that resulted from this analysis, and then also some less obvious projections that did actually produce a healthy "turn" or "reversal" in this market. The arrows in the chart below indicate where a cluster zone or price relationship was tested and illustrates the following results.

One cluster zone put in a low at 2897 which was followed by a rally to 4147 in 14 weeks!

Another cluster put in a low at 2426 which was followed by a rally to 2990 in two weeks!

A third key zone put in a low at 2087 which was followed by a rally to 2771 in three weeks!

A fourth zone did not produce any meaningful results. (See question mark.)

A single projection of a prior swing down (1343) fell just ticks off the most recent low made on April 4 (1348).

What about timing in the bigger picture??

Running my time cycles from key prior highs and lows has helped me to identify key intermediate changes in trend in this market and others. For example, let's take a look at what helped me determine that the September 1, 2000, high in Nasdaq was important. 

In the chart below, the "time lines" illustrate the coincidence of time cycles that were coming due between August 30, 2000, to September 1, 2000. The following cycles came due, from top to bottom, on the chart:

1.618      3/24 high to the 5/24 low
1.618      7/16 high to the 8/3 low
.618        5/1 high to the 7/17 high
.382        5/24 low to the 8/3 low

As the Nasdaq 100 was rallying into this "time window," these cycles told us to watch for a potential high and downside reversal. (Refer to Lesson #3 on timing cycles.) Coincidentally, we were also facing some key price resistance parameters at the same time (4083-4137) as we were moving into our time cycle decision!!  

The result of this time-cycle setup was a high made just slightly above two key price relationships at the 4147 level on September 1!! This cycle high was followed by a rather dramatic decline, as you can see on the chart below, and the September 1 high remains intact to this date!!

So now what????  What can we look at in the bigger picture in Nasdaq??

As of the writing of this lesson, we currently have a pivotal low in place in the Nasdaq 100 with the April 4 low. If, however, the decline resumes in this market (as many fear), we are looking at a healthy cluster of timing relationships in the bigger picture from Mid-May 2001 to early June!! (see time-line projections on daily chart below between May 15-June 12) This is something to keep in mind IF the decline in the Nasdaq resumes! As most of these time projections are made with a "directional bias," I am only paying attention to these particular cycles if we are trading lower into them. This is when I would start looking for a potentially important low and upside reversal. If something like this sets up, chances are, you will read about it in one of my upcoming columns!

The potential timing scenario above may or may not happen. Just know that as the market continues to unfold, I continually update and revise both my time and price projections in the market in order to make some well-educated trading decisions where both myself and my clients have the edge. I have been doing this work for over 10 years, and it has not failed me yet. 

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