The Magical Fibonacci Series

The late twelfth century Italian born Leonardo Pisano identified this mathematical series.  In the year 1202 he published a book “Liber Abaci” in which he introduced to the Latin speaking world the decimal number system of Fibonacci series. Later years he was known as Leonardo Fibonacci and he solved the mathematical problem in Liber Abaci that how fast rabbits could breed in ideal circumstances, using the Fibonacci series.

Fibonacci numbers are series of numbers which consists of:

0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181, 6765, 10946, 17711, 28657, 46368, 75025, 121393, 196418, 317811 etc

If you take any successive Fibonacci numbers, their ratio is very close to the PI i.e. 1.618034, also known as golden ratio.

Fibonacci numbers are extensively used in art, geometry, architecture, music and we can even see the resemblance of Fibonacci series in DNA. Fibonacci series is visible in the family trees of bees and cows. The Fibonacci spiral coincides with sea shell shapes, branching plants, leaves and petal arrangements and pine cones.  World’s almost all famous monuments including Pyramid of Egypt, Capitol Building of US, and even  the painting of Mona Lisa and more than that all beautiful elements on earth contains the Fibonacci numbers’ magical touch.

In Technical Analysis also we are using Fibonacci series and its retracement levels.  38.1% and 61.8% are the commonly used Fibonacci retracement levels. The picture shows S&P 500 making a high of 1565.15 on October 2008, and a low at 676.53 on March 2009.  Once these two levels have been plotted then the technical analysts can find out the retracement levels.  Here 1225.70 became the 61.8% Fibonacci series retracement level, from there we can see the market is correcting.

If you are a serious practitioner of Fibonacci series, then you can find out various uses of these series such as finding out resistance, supports, target and so on.

Posted: May 2018