Phi Ellipses
Categories: Metrics
Calling all math nerds! Phi ellipses get their name from the math-things phi and pi, which means we’re talking Fibonacci sequences. A Fibonacci sequence is that trippy pattern you see in swirly Nautilus shells and sunflower seeds.
Bringing the math in nature to the stock market is what phi ellipses do. Phi ellipses use three points to find price patterns in a security. It’s actually a bit simpler than it sounds, but the first point is wherever (yeah, really), the second point is at a peak, and the third is on the reversal.
The three points are connected with an ellipse shape, like an oval. That oval is then bisected. The direction and angle of the bisect line is what investors ultimately use from phi ellipses to uncover trends from all the noise. For short-term investors looking to make a buck off of buying low and selling high, the phi ellipses is one of many trend tools to use.
