The tendency for related waves within the same impulse or correction to maintain Fibonacci ratio relationships. Still an evolving area of research.
Description
The Fibonacci sequence (1, 1, 2, 3, 5, 8, 13, 21, 34…) is the mathematical foundation of Elliott Wave Theory. The key ratios are 0.618 (Golden Ratio), 1.618, 0.382, 2.618, and 4.236. These ratios appear as relationships between wave lengths, retracement percentages, and projection targets throughout both impulse and corrective waves.
Key Points
- Core Fibonacci ratios: 0.236, 0.382, 0.500, 0.618, 0.786, 1.000, 1.272, 1.618, 2.618, 4.236
- Common retracement levels: wave 2 retraces 61.8% or 50% of wave 1; wave 4 retraces 38.2% of wave 3
- Wave relationships: actionary waves are related by 1.618 or 0.618; corrective waves are related by these ratios to prior actionary waves
- Fibonacci ratios appear in both price (percentage) and time dimensions
- Important: Fibonacci relationships are guidelines, not rules — they indicate likely targets, not certainties
