Leonardo Pisano, or Fibonacci as he is known, is considered the most talented mathematician of the Middle Ages. The Italian mathematician finds these numbers while working on a problem and gives his name to this series of numbers. The Fibonacci Sequence is a sequence of numbers obtained by adding each number with the previous number. The peculiarity of the numbers in this sequence is that the division of the numbers in the series into the previous number brings us closer to the golden ratio. If we ask what is this golden ratio, the mathematical and geometric calculation that provides the balance of harmony with the parts of the image of the beings is called the golden ratio. For example, the ratio of our fingers from the upper node to the lower node will bring us closer to the golden ratio. This ratio shows us that the closer it gets to the golden ratio, the more aesthetically perfect it becomes.
We have already said that the Fibonacci sequence is obtained by adding each number to the two numbers preceding it. The Fibonacci Sequence also has an infinite sequence of numbers.
In order to grasp the importance of the Fibonacci series, let’s continue with the numbers after talking about the golden ratio. The Fibonacci sequence does not have to start with the number 1. The series can be started with any number. For example; 0-1-1-2-3-5-8-13-is a Fibonacci Sequence, but it can also continue as 4-4-8-12-20-32-52-84. In this sequence, the most commonly used ratio in technical analysis is 1.618. This ratio is seen in the fact that each number in the series is approximately 1,618 times larger than the previous number.
Correction Levels
When Fibonacci retracement levels are used on a chart, they can be used to identify important data such as retracement levels, entry and exit targets, and loss stop points, apart from support and resistance levels.
We use Finonacci to predict the future value of financial assets. In technical analysis, it generally uses the ratios 1.618 and 1.232. In the time period we will consider, we take the lowest price and the highest price level as data. As a result of this data, we obtain expectations about which direction the price movements may go. Fibonacci provides us with analyses that can help determine the trend that will occur. In doing so, it is based on 0%, 23.6%, 38.2%, 61.8%, 78.6%, 100%. These levels help traders predict important levels.
Fibonacci Retracement
In technical analysis, Fibonacci retracement levels are usually obtained by dividing the vertical distance between the peaks and bottoms by the Fibonacci ratios. These ratios cut the graph horizontally. These horizontal lines help us to determine support and resistance levels. Traders using this method predict that the price movements that may occur will occur at one of the Fibonacci retracement levels. If the bottoms and peaks are more than 1, we need to try each point one by one. When deciding which of these points will give more accurate results, we need to work with which price returns work more consistently.
