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Fibonacci

The Fibonacci sequence was invented by Italian mathematician Leonardo Fibonacci in the 12th century. The sequence is characterized by the sum of any two consecutive numbers equaling the next number. After the first few terms, the ratio between consecutive numbers approaches 0.618. Fibonacci numbers appear throughout nature in structures like pinecones, garden ferns, and the dimensions of the Great Pyramid of Giza. In financial markets, Fibonacci retracement levels can be used to identify potential levels of support/resistance, trend changes, and price targets. Examples from Apple stock show how Fibonacci analysis identified levels that influenced price direction and targets.

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Mathew Rafael Canave
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38 views2 pages

Fibonacci

The Fibonacci sequence was invented by Italian mathematician Leonardo Fibonacci in the 12th century. The sequence is characterized by the sum of any two consecutive numbers equaling the next number. After the first few terms, the ratio between consecutive numbers approaches 0.618. Fibonacci numbers appear throughout nature in structures like pinecones, garden ferns, and the dimensions of the Great Pyramid of Giza. In financial markets, Fibonacci retracement levels can be used to identify potential levels of support/resistance, trend changes, and price targets. Examples from Apple stock show how Fibonacci analysis identified levels that influenced price direction and targets.

Uploaded by

Mathew Rafael Canave
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Seat Number 6

CANAVE, Mathew Rafael B


BSME-1A

FIBONACCI

History:
Fibonacci sequence wan invented and discovered by Leonardo Fibonacci. The Italian
mathematician, who was born around A.D. 1170, was originally known as Leonardo of
Pisa, said Keith Devlin, a mathematician at Stanford University.

Definition:
It is also called “natures secret code” that governs the dimension of everything from a
small seashell to the great Pyramid of Giza that display a pleasing and attractive
structural design. The sequence is 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, and 89 on to infinity. The
sequence has a series of interesting properties. The sum of any two consecutive
numbers equals the next highest number. After the first four numbers, the ratio of any
number to its next highest number approaches 0.618.

USES: “Fibonacci linked with work”

Levels of support and resistance – A weakness of retracements is they can


only be measured by looking backward. However, these reviews offer
impressive patterns. Reviewing Apple’s (AAPL) decline from a peak of $202 to a
low of $79.60, we see support after 62% of the decline (red arrows) that led the
price higher. Also, we see a gap through the same support (red circle) that led
to the ultimate low. Applying Fibonacci levels at these events would have
revealed a downside price target.

Trend changes – Prices often consolidate near retracement levels. Regardless


of a trend’s potential, approaching retracements will slow the pace.

Price targets – The most applicable use of Fibonacci levels are price targets.
When AAPL bottomed at $79.60 and began rallying, the 38% retracement level
of $126 was an obvious price target. When the shares reached the price in a
quick fashion, no one should have been surprised.
EXAMPLES: In nature itself

PINECONES

GARDEN FERNS

REFERENCE:
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