Fibonnaci analysis

Fibonnaci analysis is a method in the field of technical analysis. Fibonacci is a series of numbers discovered by Leonardo Fibonacci in the 1200s. Fibonacci numbers describes the growth in nature.

The fibonacci series begins with 1 and 2, each of the following numbers is the sum of the two preceding numbers. The third and fourth number in the Fibonacci series are 3 and 5 respectively. If you divide a number by the preceding number you get a ratio that is very close to the golden ratio, 1.618. The golden ratio is a ratio that is considered to describe most of the proportions in nature.

Fibonacci analysis involves the use of the fibonnacci serie to forecast future stock prices in trends. The change in an upward trend multiplied by 1.618 is assumed to constitute the change in the next upward trend.