Fibonacci Tools

Fibonacci tools are tools based on a sequence of numbers identified by the mathematician L. Fibonacci. Each number of the Fibonacci sequence is a sum of the two previous numbers: 1, 2, 3, 5, 8, 13, 21, etc. However, the Fibonacci sequence of numbers is not so important in trading as the mathematical relationships, expressed as ratios, between numbers in the sequence. Division of any adjacent numbers of the Fibonacci sequence always gives approximately 1.618 which is considered Golden Ratio. This number becomes a basis for usage of the Fibonacci sequence in technical analysis, where 1.618 turned into 61.8%. The other key Fibonacci ratios are 23.6%, 38.2%, 50%, and 100%.

In trading, the following Fibonacci tools are used:

• Fibonacci Retracement
• Fibonacci Time Zones
• Fibonacci Channel
• Fibonacci Expansion
• Fibonacci Fan
• Fibonacci Arc

See Also

Fibonacci numbers in wiki