Golden Ratio (φ)
Elliott Wave Theory glossary · Fibonacci Price & Time Projections
Definition
The irrational number varphi = (1+√(5))/2 ≈ 1.618 — the limit of the ratio of consecutive Fibonacci numbers — that governs proportional relationships between Elliott waves. Common derived ratios include 1/varphi ≈ 0.618, varphi^2 ≈ 2.618, and 1 - 1/varphi ≈ 0.382, which appear repeatedly in retracement depths and extension targets.
Golden Ratio (φ) in plain English
The golden ratio, written varphi ≈ 1.618, is a special number that shows up all over nature and, wave theorists argue, in markets too. It's the number the famous Fibonacci sequence (1, 1, 2, 3, 5, 8, 13..., where each term is the sum of the two before it) settles toward when you divide each number by the one before it. Elliott Wave uses ratios built from it — like 0.618, 0.382, and 2.618 — to guess how far a pullback might sink or how far the next push might travel, the way you might estimate a song's next beat from its rhythm. These are educated targets, not guarantees.
Learn these first
Related Elliott Wave Theory terms
Elliott Wave Theory practice questions · Elliott Wave Theory flashcards · Elliott Wave Theory study guide