Leonardo of Pisa, nicknamed Fibonacci, was born around 1175 in Italy. Fibonacci was one of the greatest mathematicians of the thirteenth century.
Fibonacci is known for discovering a series of numbers that were named in his honor the Fibonacci numbers or the Fibonacci sequence.
1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233 …
In the Fibonacci sequence, each term, except the first two, is the sum of the previous two terms, for example, 2 + 3 = 5, 3 + 5 = 8.
Fibonacci and the golden ratio
Fibonacci also discovered that dividing each number in this sequence by the one preceding it produces a ratio of approximately 1,618 after the first four calculations. This number is known as the golden ratio. For example 233/144 = 1.618
Fibonacci levels
The relationship between any number and the next highest number is close to 0.618, for example 21/34 = 0.6176
Also, the relationship between any number and the next two higher numbers is close to 0.382, for example 89/233 = 0.3819
These ratios are generally rounded to 1.62, 0.62, and 0.38 and the percentage of these ratios is called Fibonacci levels.
Fibonacci indicators
Fibonacci indicators help traders to anticipate support and resistance levels along with price targets.
Trading software calculates and draws indicators automatically and you must learn how to use them.
There are many Fibonacci indicators such as the following:
For. Fibonacci arc
B. Fibonacci fan
vs. Fibonacci extensions
Fibonacci clusters
me. Fibonacci time zones
F. Fibonacci Channel
Fibonacci arcs are drawn to predict support and resistance levels; Those are three curves that are generally drawn between the maximum and the minimum in a given period.
Fibonacci fans They are three straight lines that are used to forecast areas of support or resistance.
