PHI-Ellipse

DEFINITION of 'PHI-Ellipse'

An investment tool used in technical analysis that is also known as the Fibonacci ellipse. The Phi Ellipse is used by traders to identify general market trends, in contrast to standard Fibonacci technical tools that attempt to determine resistance and support levels. Once three points are identified on a chart, the phi-ellipse can be drawn.

BREAKING DOWN 'PHI-Ellipse'

To draw an phi-ellipse, three points must first be selected: the first one is just an arbitrary point, the second is the peak that occurs after that arbitrary point (indentified by a reversal from the peak). The third point is another reversal back to the original direction of the trend. Once the ellipse is drawn, the line that bisects this ellipse is used to indicate the trend.

RELATED TERMS
  1. Phi Ellipses

    A Fibonacci trading tool used to aid investors in indentifying ...
  2. Fibonacci Retracement

    A term used in technical analysis that refers to areas of support ...
  3. Andrew's Pitchfork

    A technical indicator that uses three parallel trendlines to ...
  4. Fibonacci Clusters

    A tool used in technical analysis that combines various numbers ...
  5. Trend

    The general direction of a market or of the price of an asset. ...
  6. Speed Resistance Lines

    A tool in technical analysis that is used for determining potential ...
Related Articles
  1. Trading

    Taking The Magic Out Of Fibonacci Numbers

    Uncover the history and logic behind this popular trading tool.
  2. Trading

    Technical Analysis: The Use Of Trend

    By Cory Janssen, Chad Langager and Casey MurphyOne of the most important concepts in technical analysis is that of trend. The meaning in finance isn't all that different from the general definition ...
  3. Trading

    Relative Strength Index And Its Failure-Swing Points

    Confirm your buy and sell signals with this oscillator categorized as an overbought/oversold index.
  4. Trading

    Pivot Points

    Learn more about this technical indicator and how you can use it as a predictive tool.
  5. Trading

    Forex Tutorial: Technical Analysis & TechnicaI Indicators

    One of the underlying tenets of technical analysis is that historical price action predicts future price action. Since the forex is a 24-hour market, there tends to be a large amount of data ...
  6. Markets

    Using Fibonacci to Analyze Gold (GLD, GC)

    Use Fibonacci studies to analyze gold by picking out hidden harmonic levels that can provide major support or resistance.
  7. Trading

    Interpreting Support And Resistance Zones

    Use of support and resistance zones can be a key to successful trades. Learn how they work and how to use them.
  8. Trading

    Support And Resistance Basics

    Understanding the concept of Support and Resistance in trading can drastically improve your short-term investing strategy.
  9. Trading

    4 Types of Indicators FX Traders Must Know

    Successful forex traders know how to use market indicators that reveal the best time to buy or sell a forex cross rate. Here are four of the most popular.
  10. Trading

    Trend Traders

    Trend traders can have a longer-term approach to trading. They will try to find a great up trending stock, buy it and ride it until the trend changes.
RELATED FAQS
  1. How reliable is the Fibonacci retracement in predicting stock behavior?

    Learn why the reliability of the Fibonacci retracement indicator is debatable, and how the indicator is used to identify ... Read Answer >>
  2. What are some of the more common Fibonacci retracements?

    Examine the basic Fibonacci retracement levels, and learn how key Fibonacci levels are used by traders to identify potential ... Read Answer >>
  3. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Answer >>
  4. Why is the Fibonacci Retracement important for traders and analysts?

    Find out why traders and analysts in financial markets use Fibonacci retracement to help identify support and resistance ... Read Answer >>
  5. Why are Fibonacci Clusters important in a Fibonacci Retracement Strategy?

    Find out how Fibonacci clusters form and how they can be used by traders and analysts to identify support and resistance ... Read Answer >>
  6. What are the best ways to identify Retracements on a stock?

    Read about three of the most common methods for identifying retracement levels on a stock's price chart, including the controversial ... Read Answer >>
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center