Fibonacci

• Leonard Fibonacci, also known as Leonardo of Pisa,was a famous Italian mathematician who discovered asimple series of numbers that created ratios describingthe natural proportions of things in the universe.• Leonardo was given the nickname “Fibonacci”posthumously, possibly derived from his father’sname, Bonacci.• he wrote a book called Liber abaci (Book of
Calculation). This book introduced to the world, the
system of using nine numerals. He expanded hisimpressive mathematical knowledge, and eventuallythis is what has been adopted and applied as thestandard mathematical system we now use FIBONACCI Numbers• The sequence of the Fibonacci numbers is 0, 1,1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377… and goes to infinity. Starting with zero andadding 1 begins the series. The calculationtakes the sum of the two numbers and adds itto the following number• 0+1=1, 1 + 1 = 2; 1 + 2 = 3; 2 + 3 = 5; 3 + 5 = 8,5+8=13, 8+13 = 21, 13+21= 34, 21+34=55,34+55=89, 55+89=144, 89+144=233, 144+233= 377, 233+377=610, 377+610 = 987, 610+987= 1597, 987+1597=2584 FIBONACCI RatiosW W W . G R A M E E N F O R E X . C O M• Many things are fascinating about this sequence, but inparticular is the relationship it has to the golden mean. Ifyou take two numbers past the eighth sequence and dividethe smaller number into the larger, you will get 0.618 :• 89 ÷ 144 = .618• 377 ÷ 610 = .618• 987 ÷ 1597 = .618• If we divide the larger number into the smaller number afterthe eighth sequence, the result will 1.618:• 377 ÷ 233 = 1.618• 610 ÷ 377 = 1.618• 1597 ÷ 987 = 1.618• Retracement Ratio: Generally we usethis 5 ratio to trade with retracement ina trending market:• 0.236, 0.382, 0.500, 0.618, 0.786
• Extension Ratio: we use this
extension ration for trendcontinuation• 1.271, 1.618, 2.618, 4.236 How to draw Fibonacci ratios• In order to draw Fibonacci levels, you have tofind the recent significant Swing Highs andSwings Lows.• Then, for downtrend, click on the Swing Highand drag the cursor to the most recent SwingLow.• For uptrend, do the opposite. Click on theSwing Low and drag the cursor to the mostrecent Swing High.   Drawing Fibonacci in DowntrendDrawing Fibonacci in Upward trend Combine Fibonacci with Support and Resistance Combine Fibonacci with Trend LineCombine Fibonacci with Candlestick patternsFibonacci ExpansionsFibonacci Trading ?Combine the Fibonacci retracement toolwith support and resistance, trend lines,and candlesticks to find a better entry, itwould be best to use your knowledge ofthese tools to analyze the currentenvironment to help you pick a good Entrypoint and stop loss point.