Fibonacci (Fibonacci) Italian mathematician, 1202 in Pisa has published the work "Liber Abaci". This work has changed Europe - he Europeans began to use Arabic instead of Roman. This mathematician known for the fact that developed a sequence of numbers, which later became known as the Fibonacci sequence or the Fibonacci numbers.
The first number in a sequence of 0 and 1. The second sequence is developing in a way that the resulting number of the next added to the preceding one of the figure:
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181 and so on.
Eg .: 0 + 1 = 1; 1 + 1 = 2; 2 + 1 = 3; 2 + 3 = 5; 3 + 5 = 8; 5 + 8 = 13, etc.
Leonardo Fibonacci discovered that the Fibonacci sequence and its ratio can be found everywhere, even in the natural world. This sequence applies to almost as a universal rule.
This sequence has a number of interesting features:
Any number ratio of the number which is the nearest number in the sequence after the first four numbers are close to 0,618 or 61.8% (the golden section ratio). For example: 34/55 = 0.618
Any number ratio of the number which is two places below, closer to 0,382 or 38.2%. For example: 34/89 = 0.382
Any number ratio of the number which is a sequence of three positions away, close to the 0.236 or 23.6%. For example: 21/89 = 0.236
other Fibonacci levels: 50 %, 76,4 %, 78,6 %
These two figures (0,382 and 0,618) are widely used in the technical analysis , guessing the market movements. In general, the resistance level at 0,382 marks continue to move forward, while 0.618 usually indicates the direction of the change.
Price often changes the direction of 23.6 or 38.2 on the level of 38.2 conservative ingress points.
FIBONACCI PRICE COMEBACK
Price comeback - correction, when the price revolution "traces" a certain movement of the previous section. Symbol is usually traced back to one of the three most common Fibonacci levels: 38.2%, 50% and 61.8%. Fibonacci correction of the return price shall be determined from the previous fluctuation minimum to maximum, thus identifying potential support levels, retreating from the market peak. Return also recorded from the previous maximum fluctuation to a minimum, using the same relations and for possible resistance levels when the market off from the minimum.
FIBONACCI PRICE EXTENSION
Fibonacci price extension levels traders use to identify the areas which will be worth it to enter the market over the next take-off or landing trends step. Percentage extension levels of the graph presented as a horizontal line on the above / below the previous trend movement. The most popular extension levels are 61.8%, 100.0%, 138.2% and 161.8%.
HOW TO USE FIBONACCI LEVELS?
Do not forget to use the Fibonacci levels is not worth trading one themselves - you lose all your money. They are worth combine technical analysis with other elements, such as indicators, trend lines, Price Action models and others.
Good luck traders with Fibonacci!