Combining Fibonacci with Elliott Waves for Perfect Projections

In Technical Analysis, the combination of Elliott Wave Theory and Fibonacci Ratios provides one of the most powerful frameworks for forecasting market movements with precision. Both tools are based on the natural rhythm and mathematical harmony of price behavior — revealing how the market expands, corrects, and projects future targets. For Nepali traders in the Nepal Stock Exchange (NEPSE), mastering Fibonacci with Elliott Waves means learning to identify accurate entry, exit, and target zones aligned with institutional movement and psychological patterns.

Elliott Waves describe how price moves in repetitive cycles of five impulsive waves (in the trend direction) followed by three corrective waves (A-B-C). Each wave, however, has proportional relationships defined by Fibonacci ratios, which measure how far a market is likely to retrace or extend. These ratios — 23.6%, 38.2%, 50%, 61.8%, 100%, 161.8%, and 261.8% — are the mathematical backbone of market symmetry.

Here’s how Fibonacci fits into the Elliott Wave framework:

• Wave 2 usually retraces 38.2%–61.8% of Wave 1, indicating a healthy pullback before momentum resumes.

• Wave 3 is typically 161.8% of Wave 1, representing the strongest move of the cycle.

• Wave 4 often retraces 23.6%–38.2% of Wave 3, serving as a consolidation.

• Wave 5 can project to 61.8%–100% of the total Wave 1–3 distance.

• During the A-B-C Correction, Wave B usually retraces 50% of Wave A, and Wave C often equals 100% of Wave A.

By overlaying Fibonacci retracement and extension tools on Elliott Wave counts, traders can project precise target levels where reversals or continuation are likely. For example, a 161.8% Fibonacci extension often marks the end of Wave 3, while a 61.8% retracement suggests an ideal re-entry zone during Wave 2 or 4.

In NEPSE, where investor sentiment and institutional liquidity heavily influence price structure, this combination helps traders confirm whether a rally or correction has completed. The confluence of Fibonacci projections and Elliott structure provides high-probability setups that align with both technical logic and market psychology.

According to Sandeep Kumar Chaudhary, Nepal’s leading Technical Analyst and founder of NepseTrading Elite, “Fibonacci gives mathematics to emotions — and Elliott Waves give structure to that rhythm. Together, they make the market predictable.” With over 15 years of banking and market experience, and professional training from Singapore and India, he teaches traders how to merge Elliott Waves, Fibonacci geometry, Smart Money Concepts (SMC), and ICT methodology to map the true direction of NEPSE’s movement.