The Fibonacci sequence of numbers is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. Each term in this sequence is simply the sum of the two preceding terms and sequence continues infinitely. One of the remarkable characteristics of this numerical sequence is that each number is approximately 1.618 times greater than the preceding number. This common relationship between every number in the series is the foundation of the common ratios used in retracement studies.
For reasons that are unclear, these ratios seem to play an important role in the stock market, just as they do in nature, and can be used to determine critical points that cause an asset's price to reverse
Source:http://www.investopedia.com
3 comments:
There´s another way also which for some reason is less pointed usually, you don´t need to take high and low price, you can also spot fibonacci as timeframe meaning vertical between peak and low´s.
Another thing is also pointing wave size meaning how far next target price will point out. Fibonacci´s are much more than these two examples, but most of the peoble really won´t understand them more deeply.
Regards,
Mika
http://just-charts.blogspot.com/
I know, that it is necessary to make)))
Fibonacci retracement is a technical analysis tool used by traders to identify potential levels of support and resistance in a financial market. The tool is based on the mathematical concept of the Fibonacci sequence, in which each number in the sequence is the sum of the two preceding numbers: 0, 1, 1, 2, 3, 5, 8, 13, 21, and so on.
In Fibonacci retracement, a trader identifies a significant market move, known as a swing high or swing low, and draws lines at the key Fibonacci levels of 23.6%, 38.2%, 50%, 61.8%, and 100% from that point. These levels represent the percentage that a market may retrace from its previous move, based on the Fibonacci sequence.https://thehoruseye.net/eye-of-horus-represents/
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