Fibonacci Ratios -> Harmonic Ratios
The 0.618 and the 1.618 are the two numeric results derived by the Fibonacci Sequence comprising the Primary Ratios that are employed in Harmonic Trading measurements. These Fibonacci-related numbers are utilized to validate price action as harmonic price action.
From these two Harmonic Trading Primary Ratios, other numbers can be derived from these in the same manner as they were from the Fibonacci series. Specifically, the 0.786 and 1.27, are the square root of the 0.618 and the 1.618, respectively.
The square root of the 0.786 and 1.27 yield another pair of ratios of primary importance. These ratios – although derived from the 0.618 and 1.618 of the Fibonacci Sequence – serve as an effective means to decipher´price action via the measurement of harmonic ratios.
Other harmonic ratios such as 38.2%, 50% and more that exist within the Harmonic Trading approach are derived indirectly from the primary ratios of the Fibonacci Sequence, as well. This derivation is important as an effective strategy in the financial markets.
These harmonic ratios define specific and pertinent trading behavior of harmonic price action that identifies extremely accurate natural opportunities.