Fibonacci retracements are a popular form of technical analysis used by traders in order to predict future potential prices in the financial markets. If used correctly, Fibonacci retracements and ratios can help traders to spot upcoming support and resistance levels supported past price action.
It’s important to remember that Fibonacci lines are a confirmation tool. For this reason, the indicator is best used alongside other technical analysis tools such as trend lines, volume, moving average convergence divergence (MACD) and moving averages. Generally speaking, the greater the amount of confirming indicators, the stronger the trade signal is probably going to be.
Leonardo Fibonacci was a mathematician born in 1170 AD. From his work, we get the Fibonacci sequence of numbers, and also the well-known Fibonacci golden ratio. The Fibonacci sequence may be a series of numbers where subsequent number is just the sum of the two preceding numbers. So for instance , it might run 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 then on, with the sequence continuing indefinitely.
It is supported the speed of reproduction of two theoretical rabbits and therefore the subsequent increase if the subsequent generations continued to breed . At first glance, it’s going to seem somewhat confusing to seek out that there’s a connection between a 12th century mathematician, the speed at which rabbits reproduce and predicting the future direction of the financial markets using technical analysis.