Track 'n Trade Bulls 'n Bears Trading System

Insights to Fibonacci

Video Transcript

In this Bulls 'n Bears Trading video, I want to partially reveal some of the proprietary ways in which the Bulls 'n Bears interacts with Fibonacci, and Elliott Wave theory.

Of course, this video is not meant to be a complete discovery of all the great features of Fibonacci and Elliott Wave. In depth theories and strategies are covered within our other trading course materials.

This particular video assumes that you are already somewhat familiar with Fibonacci and Elliott Wave, as we talk about how the Bulls 'n Bears quantifies, verifies, and interacts directly with Fibonacci and Elliott Wave projections and retracements. However, keep in mind, you do not need to have experience with Fibonacci & Elliott wave to benefit from the Bulls ‘n Bears trading system in general.

The first step is to briefly review Elliott Wave. Elliott Waves are nothing more than a recurring price pattern, just like a 123 top formations, or a narrow sideways channels.

An Elliott Wave Pattern is simply a series of market advancements, and retracements, which can be counted and measured; basically three advancing waves, followed by 2 smaller retracing waves. (This theory works exactly the same in reverse as well, either in a bullish trend, or a bearish trend, and is considered to be ‘fractal,' which simply means it adheres to the same rules across all chart time frames.)

The logic goes, that markets move in waves. Basically, two steps forward and one step back, then two steps forward once again. This is the basis of Elliott's theory; AB-CD, AB-CD

Fibonacci on the other hand is a mathematical retracement and projection calculation, or simply put, a ruler. We use the Fibonacci ruler to measure the size of each Elliott Wave retracements and projections, we then use Fibonacci to project out into the future an approximation of where and when the next Elliott Wave advancement might be.

Using these two tools, one in combination with the other, makes a very powerful forward looking market projection strategy, and helps us define turning points on a chart, which are in-turn high probability market entry and exit locations.

When we overlay the Bulls 'n Bears red light, green light system, to this already very powerful combination, we get what seems to be an almost 3-D view of the Elliott Wave and Fibonacci patterns. The Bulls 'n Bears actually confirms our Elliott Wave and Fibonacci thought processes.

Here's how it works: Elliott moves through wave one…two steps forward, than one step back. Two steps forward and one step back again; and so on...

The Bulls 'n Bears also counts and measures these moves within its hyperbolically linked formulas. As the Elliott Wave pattern advances, the Bulls 'n Bears changes the Price Bar colors to green. As the market pulls-back against the overall trend, the Bulls 'n Bears changes the color to yellow, if the market pulls back beyond the Fibonacci lower region, this is a validation of trend reversal, and the Bulls ‘n Bears will change the price bar color to red.

In a perfect world, we would see an advancing market move through the five steps of the Elliott Wave with green Price Bars, and with yellow price bars reflected through each gentle pullback as the market retraces back toward the 61.8% Fibonacci Golden Ratio. When the market begins to advance forward once again, the Bulls 'n Bears would confirm the positive rise in price by turning the price bars back to green.

Again, in a perfect world, this pattern of color change would continue up and through the Elliott Wave pattern, at which point it would finally turn red, but only after reaching the top of our Elliott Wave Head and Shoulders, or 123/ABC top reversal formation, where the market is expected to begin its downward slide in price, back to the overall long-term neutral or 61.8% golden ratio level.

Of course, if we were working with a Bearish market, this entire scenario would be reversed or turned upside down. Rather than green Price Bars, we would conversely be experiencing an Elliott Wave red and yellow price bar decline.

Now, as I mentioned before, the Bulls ‘n Bears has three primary formula settings, Traditional, Progressive, and Aggressive, not to mention additional sensitivity levels within each formula for fine tuning, as well as filters, this is what makes the Bulls ‘n Bears so dynamic.

In this example I'm using the Traditional Formula, which is calculated to provide the best overall 61.8% Fibonacci retracement calculation, whereas the Progressive and the Aggressive formulas will significantly ‘squeeze' that calculation down, each bringing the Bulls ‘n Bears into a more aggressive and less forgiving calculation which is typically more ideal for short-term, intraday traders.