Walter Bressert's ProfitTrader 7.0: FibPods - 1

FibPods forecast future cycle turning points in all markets, and all time frames. When an overbought or oversold oscillator turns within a FibPod, it increases the odds of that time period being a cycle top or bottom, and a Mechanical Buy/Sell Signal confirming a cycle top or bottom of being followed by a sizeable price move in the direction of the trade.

ProfitTrader 6.0 and 7.0™ use Fibonacci Price Retracements to buy bottoms and sell tops, and also to forecast and anticipate future price moves. However, Fibonacci ratios can also be used to forecast Fibonacci time periods, or FibPods, into the future. These are high probability periods in which a cycle top or bottom is likely to occur. All markets and all time frames move in waves, or cycles. By using two cycle turning points - top-to-top, bottom-to-bottom, top-to-bottom or bottom-to-top - we can apply Fibonacci ratios to help anticipate future cycle turning points, and Buy/Sell Signals, that coincide with oscillator highs and lows. In ProfitTrader, we use the 10DoubleStoc and BLine oscillators to identify cycle tops and bottoms, and to generate Mechanical Buy and Sell Signals.

What exactly is a FibPod?
A FibPod is a time period in which a cycle top, or a cycle bottom has a high probability of occurring based on Fibonacci ratios. A FibPod is generated by taking any two cycle turning points and calculating the distance from one cycle turning point to the next, then forecasting three Fibonacci ratios into the future. A powerful advantage of FibPods is that in intraday trading we need little price history. We can use cycle tops and bottoms in Days 1 and 2 to forecast FibPods for potential cycle tops and bottoms into Days 3 and 4, that we trade. FibPods also work well in daily charts but require more price history.

Chart 1 - Cycle Points E and F in Days 1 and 2 make FibPod projections for Days 3 and 4.
The oscillator at the bottom of Chart #1 is the 10DoubleStoc; the cycle highs and lows are identified on the price bars - blue dots for cycle highs; red dots for cycle lows. Smaller dots of the same colors are plotted on the oscillators to show where the cycles turned. Comparing the cycle dots on the price bars to the cycle dots on the oscillators you can see that the DoubleStoc Oscillator is quite accurate in identifying cycle tops and bottoms. By forecasting FibPods into the future, we can increase our odds of accurately forecasting and identifying high probability cycle turning points as they occur.
In Chart 1, two points are identified; Cycle Bottom E on 10/5 and Cycle Top F on 10/8. By calculating the number of price bars from E to F and multipying that by three different Fibonacci relationships -- .618, 1.000 and 1.618, the colored FibPods are generated. A FibPod is an exact forecast of each ratio plus/minus one price bar. The program will allow you to make the FibPod (X) bars wider for different time frames.
  • The cyan FibPod shows the .618 forecast of the EF distance +/- one price bar.
  • The magenta FibPod is a doubling of the distance from E to F, +/- one price bar.
  • The green FibPod shows the 1.618 forecast of the EF distance +/- one price bar.
  • The EF FibPods were forecast based on Cycle Bottom E and the Cycle Top F. In addition to being a cycle bottom, E is also the low of the day; and the Cycle top at F is also the high of the day.
Time periods using the high and the low of the day often have more "energy" than cycle tops or bottom in between the high and the low of the day or days.
FibPods show in historical charts, and also forecast into the future when printed in the Expert Commentary.
As you view these time periods you will see that projected FibPods can be considered as potential cycle turning points. Also, we look for FibPods that stack one on top of the other may show a higher probability for the formation of cycle tops and bottoms.