How to use Fibonacci sequence in Forex

In this article we’ll give you a brief introduction on the use of a special code in the online trading. We will focus on the Fibonacci code. Fibonacci was an Italian mathematician that created a famous sequence 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 etc.

As you can see, each number is the sum of the previous two (eg. 3 = 1 + 2 or 55 = 21 + 34). This sequence can continue indefinitely. This sequence is considered by many experts as the “sequence of numbers that explains the nature of things” and it has been studied (and is still studied) by many mathematicians, physicists and philosophers.

But the information more useful for your trading activities is the relationship between two consecutive numbers in the series. In fact, this ratio is 1.618 and its inverse is 0.618. It is a number that constantly returns when measuring durations of price movements. To be precise, the analysts that follow this trend have included in software for technical analysis for who do trading (so-called “Fibonacci retracements“).

In addition to the retracements of the number series, there are other fields of application of the Fibonacci sequence in trading. One of the most interesting regards the so-called “timing” related to future markets.

Thanks to various reviews during the years, it was possible to give an empirical confirmation to these models and that series numbers now are the basis of a fundamental economic theories as Elliott Wave theory.

To clarify further:

Author: Editorial staff of 70trades reviews blog