Fibonacci numbers are a sequence of numbers in which every number is the sum of the two preceding ones. This sequence of numbers is named after Leonardo Fibonacci, an Italian mathematician who introduced Hindu-Arabic numerals to the Western world in the 13th century. The Fibonacci sequence is a natural phenomenon that appears in many different contexts and is widely used in finance and trading, including forex.
The Fibonacci sequence starts with 0 and 1, and each subsequent number is the sum of the two preceding numbers. The sequence continues indefinitely, and the first few numbers in the sequence go as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, and so on.
The Fibonacci numbers are found in nature, such as in the arrangement of leaves on a stem, the number of petals in a flower, the spiral shape of a seashell, and the branching of trees. They are also found in financial markets, where they are used in technical analysis to identify potential levels of support and resistance, as well as to predict price targets.
In forex trading, the Fibonacci sequence is used to identify potential levels of support and resistance in a currency pair’s price movement. Traders use Fibonacci retracements, extensions, and projections to determine the potential price levels where the price is likely to reverse or continue its trend.
Fibonacci retracements are used to identify potential levels of support and resistance during a price correction. Traders draw a line from the highest high to the lowest low of a price movement, and then use the Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8%, and 78.6% to identify potential levels of support and resistance.
Fibonacci extensions are used to identify potential levels of support and resistance during a price trend. Traders draw a line from the lowest low to the highest high of a price movement, and then use the Fibonacci ratios of 127.2%, 161.8%, and 261.8% to identify potential levels of support and resistance.
Fibonacci projections are used to predict potential price targets during a price trend. Traders draw a line from the lowest low to the highest high of a price movement, and then use the Fibonacci ratios of 161.8% and 261.8% to identify potential price targets.
In summary, Fibonacci numbers are a sequence of numbers in which every number is the sum of the two preceding ones. They are found in nature and financial markets, including forex. Traders use Fibonacci retracements, extensions, and projections to identify potential levels of support and resistance, as well as to predict price targets. The Fibonacci sequence goes as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, and so on.
