One of the most commonly used indicators that forex analysts almost always apply at some time or another to their charts are Fibonacci retracements. So, who was Fibonacci?
Born around 1170, Fibonacci was the offspring of a merchant and city official. He grew up to be a famous mathematician, and was the discoverer of the series that we now know as the Fibonacci series. He published his own book of calculations or Liber Abacci where he first printed his series.
The Series
The number series goes like this: 1,1,2, 3,5,8,13,21,34,55,89>>On to infinity. The next number in the series is derived from adding up the last two numbers in the series. 1=2=3, 2+3=5, etc.
Fibonacci Ratios
Paramount to forex traders are the Fibonacci ratios. These ratios are arrived at by measuring the ratio of a Fibonacci number with that of its next highest number. After the first few numbers, if you do so you will see that the result is 0.618 (for example – 34 divided by 55 = 0.618) or close to it. The higher you go; the closer to Phi will be the result.
Similarly, the ratio between every alternate number is seen to be 0.382. For example, 34 divided by 89, and so on. It suffices to say that all Fibonacci retracement levels we use are a ratio of two Fibonacci numbers.
Born around 1170, Fibonacci was the offspring of a merchant and city official. He grew up to be a famous mathematician, and was the discoverer of the series that we now know as the Fibonacci series. He published his own book of calculations or Liber Abacci where he first printed his series.
The Series
The number series goes like this: 1,1,2, 3,5,8,13,21,34,55,89>>On to infinity. The next number in the series is derived from adding up the last two numbers in the series. 1=2=3, 2+3=5, etc.
Fibonacci Ratios
Paramount to forex traders are the Fibonacci ratios. These ratios are arrived at by measuring the ratio of a Fibonacci number with that of its next highest number. After the first few numbers, if you do so you will see that the result is 0.618 (for example – 34 divided by 55 = 0.618) or close to it. The higher you go; the closer to Phi will be the result.
Similarly, the ratio between every alternate number is seen to be 0.382. For example, 34 divided by 89, and so on. It suffices to say that all Fibonacci retracement levels we use are a ratio of two Fibonacci numbers.
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