Because of the variation between the length of the cycles within each fib, there is often a correlation between different directors in different fibs. For example, the convergence of the Red [d5] and Yellow [d6] directors on fib 3 chart may correspond to the Dark Blue [d1] and Pink [d2] directors on a fib 5 chart. Therefore, what is seen as a development of change in trend within the fib 3 chart, would be viewed merely as a correction in terms of the fib 5 chart. Thus, potential support or resistance levels seen with the intermediate and longer cycles within the fib 5 chart can be viewed as potential objective levels on the fib 3 chart.
It has also been noticed that similarities occur between different fibs within different time-frames. For example, the director structure on a 15 minute fib 5 chart may have a strong correlation to that of an hourly fib 3 chart. As well as confirming key levels of support and resistance, because the development of say, a 15 minute chart will be faster than that of an hourly chart, the user is able to predict the break of key levels more rapidly.
By observing the structure of the directors within different fibs over different time-frames, we are therefore able to construct an in-depth analysis of a specific market over a multiple of time spans. For example, although the longer directors within a daily chart may remain bullish, the inability to break a resistance level seen in the weekly charts, may allow the shorter directors (in the 'dailies') to turn against the trend. This could be confirmed in the four hourly charts, where the longer cycles have moved above the price and are rapidly converging, and so on.
Just as the effect of the directors is cumulative, so is the effect of the analysis of each fib and time-frame. While it is more common for a bull phase within one time-frame to be considered a correction within a longer one, situations have been identified where the majority or all fibs and time-frames give similar signals. In this event, an extremely large move usually ensues.
For general background on classical application of Fibonacci techniques, see Rick Bensignor's excellent article "Fibonacci numbers work in mysterious ways" reprinted from the Bloomberg magazine, February 1998.
