fibo

The Fibonacci technique is a method commonly used in technical analysis within financial markets, based on the Fibonacci number sequence. This sequence, developed by the Italian mathematician Leonardo Fibonacci, is a series of numbers where each number is the sum of the two preceding ones: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, etc. The ratios between these numbers reveal certain mathematical relationships, such as the "golden ratio" (approximately 1.618), which frequently appears in nature and human-made systems.
Fibonacci Technique in Financial Analysis
In financial markets, the Fibonacci technique is primarily used to identify potential support and resistance levels for price movements. The most commonly used tools include:
Fibonacci Retracement:
Specific Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, 78.6%) are calculated between the start and end points of a price trend (upward or downward).

These levels indicate potential areas where the price might pull back or correct.

For example, if a stock rises from $100 to $150, retracement levels are calculated based on these ratios (e.g., the 61.8% retracement level might be around $123).
Fibonacci Extensions:
Used to determine potential target levels if the trend continues.

Common extension levels include 100%, 161.8%, 261.8%, etc.
Fibonacci Arcs, Fans, and Time Zones:
Arcs: Show potential reversal points based on time and distance.

Fans: Draw trendlines at angles based on Fibonacci ratios.

Time Zones: Predict points in time where price movements might reverse.
How It’s Applied
On a charting platform (e.g., TradingView), you select the Fibonacci tool.

You mark the start and end points of a trend (e.g., the lowest and highest prices).

The tool automatically plots the Fibonacci levels, which can guide trading decisions.
Purpose
Support and Resistance: Identify levels where the price might pause or reverse.

Target Setting: Determine potential profit-taking points if the trend continues. #FIBO

Risk Management: Set stop-loss levels.
Although this technique is purely mathematical, its effectiveness in markets often stems from traders and investors acting on these levels, creating a self-fulfilling prophecy. #fibonachi #Fibonacci🚀💰📈