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Line
Studies
In technical analysis, lines and various
geometric figures to be plotted in price charts or
in indicator charts are called line studies. Those
include the Support/Resistance
Lines and Trend
Lines described above, along with:
Fibonacci
Instruments
Leonardo Fibonacci was an Italian
mathematician born 1170 AD. He is considered to have
invented numerical series during his studies of Great
Pyramid of Giza. Fibonacci Numbers are a numeric sequence
where each next number can be got by adding the last
two ones: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144,
etc.
These numbers are interrelated with
a series of curious correlations. For example, each
number in the series is approximately 1.618 times
more than the previous one, and each preceding one
makes approximately 0.618 of the consequent one.You
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There are several widespread instruments
of technical analysis based on Fibonacci Numbers.
The general interpretation principle of these instruments
consists in the fact that, when the price approximates
to lines built with their help, the changes in trend
development should be expected. Fibonacci Arcs
Gann
Instruments
W.D. Gann (1878-1955) developed a
number of unique methods of price chart analysis.
He paid the most attention to geometrical angles reflecting
the interrelation between the time and the price.
Gann believed that certain geometrical figures and
angles have specific features to be used for forecasting
price dynamics.
Gann considered that there was an
ideal ratio between time and price if the price grew
or fell at an angle of forty-five degrees to the time
axis. This angle is designated as "1?1"
and corresponds with unit price increase for each
unit time interval,
Other
analytical instruments
There are line studies
being largely used in technical analysis and helping
to define channels and trend changes. These instrements
are:
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