Book: Kane Trading on: Entry Techniques
December 19-21, 2003 Commentary (weekend edition)-
Today's commentary should prove to be quite interesting. The concepts that I will cover today will very briefly touch upon a fascinating area of Fibonacci research that I will be making available some time next year. It has to do with Fibonacci and the time factor. As I've alluded to in a few of my books, I feel that time is just as 'harmonic' as price.
I've conducted a very informal 'market research' survey about what material my customers would like me to cover in my next book (once I finish up 'Trade Management, hopefully on time at the end of February). Of the choices that I made available to the survey participants, one choice stood out very clearly, and that was my work on Fibonacci time relationships. People just can't get enough of new Fibonacci material.
So as a sort of a lead in for my next work, I'll start to include more charts and ideas showing the Fibonacci techniques applied not only to price, but also to time. Since I've been working on a lot of the material with regards to Fibonacci and time (I originally was planning on this work being my second book), I'm hoping to have this new book completed by next summer. Maybe that's too optimistic, but the readers want it, and I'm going to do my best to provide it.
Let's look at a pattern and grouping I spotted on FISV. Two things really jumped out at me on this one. The first was the tightness of the grouping. Almost every number I added fell just about exactly on the other numbers. This is one of the tightest groupings I've ever seen. Usually with this many numbers I get two or three groupings that are fairly close together. This time everything laid out in one spot. Let's look at the daily chart.

Chart 1
The 5-point pattern that I am looking at may not be clear to the reader, so let me highlight that. I'll add on some labels for the points, as well as retracements for the B and C points.

Chart 2
FISV not only has that extremely tight grouping at the completion point, but the B and C points are extremely close to .618 retracements. FISV is very harmonic. The pattern completion point has all the 'standard' numbers falling on top of each other. The ABCD is a 1.0. The 1.618 BC external retracement is in there. The .886 of the XA leg, expansions, you name it, it's all there.
Now, I find FISV to be a very choppy stock. It falls in that category I sometimes see, and that is choppy and very harmonic. Other examples like this are SBUX and BBBY. They can form some great setups, all the while chopping all over the place. The chop can make the trading very difficult. Normally, I try to avoid such stocks.
I looked at FISV further, though, and noticed the time harmonics were just incredible, in my opinion. That piqued my interest in this one. Let's look at some Fibonacci time relationships, just like we might look the price relationships.

Chart 3
Here we see that the ABCD part of the pattern was an .886 time retracement of the XA leg. In other words, the ABCD took .886 times as long to form as the XA leg did. But recall that the ABCD is also an .886 retracement of the XA leg in terms of price.

Chart 4
Here we have a close-up of the BC retracement of the AB leg. It was an exact .236 time retracement. Let's look at another time relationship.

Chart 5
The AB leg is almost exactly a .382 time retracement of the XA leg. FISV is very 'time harmonic'. Let's finish with one more time relationship.

Chart 6
Here I'm looking at the relationship between the time it took the AB leg to form, and the time it took the CD leg to form. Recall that the price projection was a 1.0. The time projection was very close to an .886. I rarely see an issue this time harmonic.
Now, does any of this guarantee that this grouping will hold? Of course not. And do all these harmonic time relationships guarantee that I will be able to make money trading FISV? Again, as you can guess, of course not. What all this does, in my opinion, is give me a better chance to develop an edge that I can use for my trading.
Now I'm able to not only zero in on price areas where I might want to consider a trade, but I can also find clues as to when I might want to consider a trade. I have found that I can use many of the same techniques with time as I do with price. My Fibonacci time book will be all about forming Fibonacci time groupings, and how I use them. It will be interesting, I can promise you that.
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