What is Fibonacci 2021? Using Fibonacci in Forex – Introduction to Forex
Fibonacci; It is the name given to the series of numbers formed by adding each number with the previous number. Considering the importance of the golden ratio; It is also of great importance because it is the sequence of numbers that can come closest to the golden ratio. These numbers are used in mathematics and finance sectors. Fibonacci numbers are used when analyzing the Forex market. Charts obtained about price increases and decreases in the Forex market can be analyzed with Fibonacci tools. The rates used in technical analysis for graphic reading are mostly 1.618 and 1.232. Analysis is done with Fibonacci tools and the Fibonacci tools used are listed below:
- Fibonacci Retracement
- Fibonacci Fans
- Fibonacci Time Zones
- Fibonacci Springs
History of Fibonacci
By the year 1201 Fibonacci emerged. It was discovered by Leonardo Fibonacci, who was born in Pisa, Italy in 1170. In Fibonacci’s book called Liber Abaci, the relationship of numbers with each other is included. However, many years after Fibonacci died, these numbers began to be mentioned with the name Fibonacci. It is used as a guiding map. Fibonacci is often preferred for analysis purposes. At the same time, Fibonacci occupies an important place in every field of mathematics. For the purpose of analysis in the financial field, more accurate analysis can be made by using Fibonacci and its tools.
What is the Importance of the Fibonacci Sequence?
Fibonacci sequence it is possible to approach the golden ratio with, and the golden ratio is found in every object in daily life; It makes the Fibonacci sequence both important and mysterious. The golden ratio was found by the ancient Egyptians. Both Greeks and Egyptians preferred to use the Fibonacci series in architecture. There is a geometric ratio between the parts that make up each whole. Some of the daily life examples encountered in the Fibonacci sequence are as follows:
- When the ratio of index finger to the previous knuckle is examined, the golden ratio is encountered.
- The proportions of the organs in the human face also give the golden ratio.
- In Egyptian pyramids, the golden ratio is obtained when the base and height are compared.
Where Did The Fibonacci Series Get Its Name?
Numbers found by Leonardo Fibonacci. Leonardo Fibonacci, born in Italy, discovers Fibonacci numbers while investigating a completely different problem. Later, he found it appropriate to give his own surname to these numbers.
What is the Golden Ratio and Eliot Wave Theory?
When the Eliot wave theory is evaluated in terms of mathematics, the Fibonacci number sequence constitutes its mathematical dimension. It can be seen that the basic waveform is divided into Fibonacci numbers. The golden ratio is calculated with the Fibonacci numbers.
All numbers from the first to the last number are divided by the number after them, and each time the result is 0.618. When it is divided by the number that comes before it; the result is found as 1.618. These ratios are called the golden ratio and these ratios can be seen in every corner of nature. Moreover, the fact that the distance between the belly and the foot in the human body corresponds to 1.618 of the human height is explained by the golden ratio.
Why is Fibonacci Used in Forex?
Looking at the areas where the Fibonacci sequence is widely used; at the beginning of these Forex industry is coming. There are also Fibonacci tools among the platforms used for analysis in the Forex market. Chart reading can be done with Fibonacci tools according to price increases and decreases. It is also possible to analyze. While technical analysis with Fibonacci, the ratios of 1.618 and 1.232 are mostly preferred. Fibonacci in technical analysis Other common tools are given below:
- Fibonacci Retracement
- Fibonacci Fans
- Fibonacci Time Zones
What is Fibonacci Retracement?
Fibonacci Retracement; trim levels can also be named as. Prices start from a point. They then accelerate and return after reaching a certain acceleration. At the points determined by the Fibonacci ratios, the price is likely to encounter resistance. The lowest and highest price points can be determined with Fibonacci Retrecement.
In order to use the Fibonacci Retracement tool, this tool should be preferred from the analysis platform first. Then the lower level of the price range must be found. It is seen that the correction level is drawn on the upper level after holding down the left mouse button. If the chart is in a downward trend; A correction level is drawn from the upper level to the lower level. Resistance and support points seen in the charts; It is associated with price movements.
It should not be expected that the movements occurring in the chart are towards only one direction. Reversals can be observed on the charts as a result of the movements meeting with support and resistance in certain time periods. In such cases, it is quite easy to analyze price movements in Forex with Fibonacci. The Fibonacci levels taken into consideration are; It is 23.6, 38.2, 50.0 and 61.8.
What Does Fibonacci Fans Mean?
Fibonacci Fans; It is a tool used for analysis purposes. However, compared to Fibonacci Retracement, it is used less frequently. Fibonacci Fans lays the groundwork for the analysis of the trend of the trend and the emergence of predictions based on the results of this analysis. In the price tags of the trend to be examined, Fibonaci Fans lines are added between the lower level and the intermediate peak. With these lines, resistance and support points for the trend can be seen. The lower and upper limits of price changes can also be determined.
During its use, first the marking is made at the base point. Then the ceiling point is determined and a guide line is drawn from these two points to each other. A guideline is drawn at the ceiling of the intermediate trend, not the main trend. Both upward and downward movements can be seen with Fibonacci Fans. It is possible to analyze by drawing a line for rising movements from the floor to the ceiling and the falling movements from the ceiling to the floor.
Why Use Fibonacci Time Zones?
Fibonacci Time Zones; Also called time intervals. It is one of the important tools used in technical analysis on the Forex market. It is a tool used based on the price variable. Both price and time can be variable. Fibonacci Time Zones is a tool that is analyzed over time. Time intervals for the Fibonacci Time Zones tool are determined on a daily basis. It is divided into 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89… days. During these time intervals, fluctuations in prices can be detected.
Seeing the reflections on the graph at certain time periods is provided with the Fibonacci Time Zones tool. In order to use the Fibonacci Time Zones tool, it is necessary to first select the tool and then determine the price exit point. Vertical lines are seen after the price exit point is marked. These vertical lines that appear automatically; They are formed thanks to the Fibonacci ratios.
When the opinions of technical analysts are evaluated; It is seen that the fluctuations in prices are affected by the past. Fluctuations are thought to have a history. It is thought that the current price movements have the potential to affect the price movements that will occur after them. Past movements, in the opinion of the analysts, are interdependent.
What are Fibonacci Springs?
The circular use of Fibonacci correction levels is called Fibonacci. Preferred levels while drawing arcs are; 38.2%, 50% and 61.8%. The spring acts as a resistance here. When the price rises, if it comes into contact with the last spring; the spring acts as a support. Using Fibonacci Looking at; Fibonacci arcs are a tool that is drawn to the extreme point of the trend.