Do the Fibonacci Time Horizons Hold Predictive in Determining Key Reversal Points in the Dow Jones

Abstract

In the world of financial markets, every day dozens of new tools and indicators are devised by technical analysts, portfolio managers and experienced traders for determining a market’s strength and its future direction.

In this modern day environment of market analysis through ‘technical’ methods rather than ‘fundamental’ one’s, the Fibonacci numbers have gained significant importance for technical analysis. The use of these numbers is quite common with reference to ‘Fibonacci Retracements’ in different capital markets across the world. There are tools for price analysis such as ‘Fibonacci Retracements’ available to investors however another important determinant in the value of an investment is time and how it effects an asset(commodity, stocks, forex etc) over a certain period.

In this context, the Fibonacci time horizons are of key interest as they are assumed to hold predictive value in determining future market direction. This research paper aims to understand whether such a predictive relationship exists between the Fibonacci time horizons and modern day markets.