This is a combination of Fibonacci and /retracements.
The script can automatically draw as many:
- Fibonacci Retracements
- Fibonacci Fan
- Gann Retracements
- Gann Fan
What are Fibonacci retracements?
levels are horizontal lines that indicate where are likely to occur. They stem from Fibonacci’s sequence. Each level is associated with a percentage which is how much of a prior move the price has retraced. The levels are 23.6%, 38.2%, 61.8%, and 78.6%. While not officially a Fibonacci ratio, 50% is also used. The indicator is useful because it can be drawn between any two significant price points, such as a high and a low. The indicator will then create the levels between those two points.
What are retracements?
A developer of and trading was W.D. . theory expects a normal retracement of 50 percent. This means that under normal selling pressure, the stock price will decline half the amount of its most recent rise, and vice versa. It also suggests that retracements occur at the halfway point of a move, such as 25 percent (half of 50 percent), 12.5 percent (half of 25 percent), and so on.
What is Fibonacci fan?
Fibonacci fan is a set of sequential drawn from a trough or peak through a set of points dictated by Fibonacci retracements. The first step to create it is to draw a covering the local lowest and highest prices of a security. To reach retracement levels, the trader divides the difference in price at the low and high end by ratios determined by the Fibonacci series. The lines formed by connecting the starting point for the base and each retracement level create the Fibonacci fan.
What is fan?
A consists of a series of lines called angles. These angles are superimposed over a price chart to show potential levels. The resulting image is supposed to help technical analysts predict price changes. believed the 45-degree angle to be most important, but the also draws angles at degrees like 75, 63.75, 26.25 and 15. The originates at a low or high point. The resulting lines show areas of potential future . The 45-degree line is known as the 1:1 line because the price will rise or fall at a 45-degree angle when the price moves up/down one unit for each unit of time. All other lines in the are drawn above and below the 1:1 line. The other angles are associated with 2:1, 3:1, 4:1, 8:1 and 1:8, 1:4, 1:3, and 1:2 time-to-price moves.
The most of the time I dedicated to writing this script has been spent on handling these problems:
1. Finding Local Highest/Lowest Prices
In order to draw Fibonacci and /retracements, it's necessary to find local highest and lowest price points (Extrema) on the chart. As this could be so challenging, most traders and coders draw the lines covering the low and high prices over a given period of time or a limited number of bars back instead. I already wrote an indicator using this approach (Auto Fibonacci Combo).
In this new script I tried to find the exact highest and lowest prices based on this idea that: if a high point is formed lower than previous high which was after a lowest point, then that previous one was the local highest point, and vice versa if a low point is formed higher than previous low which was after a highest point, then that previous one was the local lowest point. So logically an extremum price on the chart won't be found until the next high/low point is formed.
2. Finding Proper Chart Scale for Fan
Based on the theory, angles are sensitive to the chart price scale and in order to have the right angles, the chart must be made with the proper scale. J.A. Hyerczyk in his book "Pattern, Price & Time - Using Theory in Technical Analysis" suggests that the easiest way to determine the scale of a market is by taking the difference between top-to-top and bottom-to-bottom and dividing it by the time it took the market to move from top to top and bottom to bottom.
Thus on a properly constructed chart, the basic equation for calculating angles is: Price * Time.
3. Drawing Fans and Relocating Fan Labels at Each New Bar in Pine (A Programming-Related Subject)
To do this, I used linear equations and line slopes. Of course it was so complicated and exhausting, but finally I overcame that thanks to my genius cousin.
Settings and Usage
By default, the script shows detected extremum points plus 1 Fibonacci fan, 1 , 1 set of Fibonacci retracements and no retracements on the chart. All of these could be changed in the indicator settings beside the color and transparency of each line.
Feel free to use this and send me your thoughts!
Nello spirito di condivisione promosso da TradingView, l'autore (al quale vanno i nostri ringraziamenti) ha deciso di pubblicare questo script in modalità open-source, così che chiunque possa comprenderlo e testarlo. Puoi utilizzarlo gratuitamente, ma il riutilizzo del codice è subordinato al rispetto del Regolamento. Per aggiungerlo al grafico, mettilo tra i preferiti.