Trading Center

Research & Innovation

Trading Stocks & Indices

Trading Forex

Exotic Instruments

Fibonacci numbers and Technical Analysis


0.618 is the Golden Ratio deriving from Fibonacci SequenceFibonacci numbers were introduced by the Italian Leonardo Fibonacci in the early 1200. In the Fibonacci sequence of numbers each number equals the sum of the previous two numbers. Here are the first numbers of the sequence: 1,2,3,5,8,13,21,34,55,89,144,233,377,610,987 etc.
In addition any given number of the Fibonacci sequence equals 1.618 times the previous number and 0.618 of the next number.

The Golden Ratio

The number 0.618 mentioned before is commonly known as the Golden Ratio. There are two other important ratios for technical analysis which derive from the Fibonacci sequence: 0.382 and 0.5.


How Fibonacci numbers are used in Technical Analysis

Fibonacci numbers are used in Technical Analysis to determine price support and resistance levels.

1) a 38.2% retracement usually indicates a prior trend will continue,

2) a 50% retracement indicates that a prior trend is possible to continue,

3) a 61.8% retracement indicates the origin of a new prior trend.


► Home

► Learn the Basics of Technical Analysis

► Forex Technical Indicators

► Elliot Wave Principle

► Major Types of Charts

 Trading Platforms Review

 

TradingCenter (2012)

You are not allowed to publish, reproduce, translate, merge, sell, rent or distribute any content on this website (TradingCenter). You are not also allowed to create a derivative work or utilize framing techniques to enclose any content on this website (TradingCenter).


Advertise with us

Advertise on TradingCenter.org as long as your services can be proven reliable.. »email us..