The butterfly indicator (based on the Fibonacci magic sequence) can be regarded as a product of the natural laws of things. Ideally, if X, A, B, C, D are confirmed in the trend chart Each point can be used to determine the reversal trend after point D. The combination of callback ratios between points X, A, B, C, and D must satisfy a specific Fibonacci sequence combination. Of course, in the actual trend, the morphological characteristics of the trend and the magnitude of the correction will always be infinitely close to the ideal state. In this way, we need to work hard on the selection of points.

The Fibonacci sequence has been widely used in technical analysis. Gann created his own system by combining the Fibonacci sequence with geometry; Elliott used Fibonacci numbers to interpret Dow Theory and Into waves; Jialulan used Felix numbers combined with the calendar to create a spiral calendar. The Butterfly Principle is also formed through the combination of Fibonacci proportions. In addition, the analysis methods mentioned above are not only applied in foreign exchange technical analysis, but are also effective in stock K-line and futures K-line. This further illustrates that the Fibonacci Magic Sequence exists in all areas of the objective world (for this point of view, it is recommended to read Chapter 1 of "The Application of Fibonacci Strange Numbers and Buying and Selling Trading Strategies").

The valuable thing about the butterfly principle is the objectivity of its existence. This objectively existing product makes analysis more objective. All that needs to be done is to find this tangible form, that's all. This is why the butterfly principle is superior to many technical analyses. Many technical analyzes are based on artificially obtaining experience and patterns through historical trends, and then using auxiliary measures to predict the future pattern. However, the premise that must be ensured is that this pattern must exist forever. But this is often not the case. Today’s support and resistance levels may become vulnerable tomorrow. A false breakthrough of the trend line will knock off your stop loss. A false divergence may cause you to lose your position. Everyone should have experienced the tried and true. Technical indicators suddenly fail, and people give this a nice name called indicator passivation. Maybe you can achieve a relatively high prediction accuracy through the superposition of multiple indicators, but due to the passivation of indicators you may constantly change your trading ideas.