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The golden ratio is a special number approximately equal to 1.618 In the Fibonacci Sequence (0, 1, 1, 2, 3, 5, 8, 13, …), each term is the sum of the two previous terms . As you go farther and farther to the right in this sequence, the ratio of a term to the one before it will get closer and closer to the Golden Ratio.
In Fibonacci series, when a number is divided by the previous number the approximate ratio is 1.6180.
Similarly when the number is divided by next number the ratio is .6180, divided by next to next number ratios is .3820, and so on.
This indicates the retracement.
Hence 1.618 is referred as golden mean/ golden ratio/ phi.
In Fibonacci series, when a number is divided by the previous number the approximate ratio is 1.6180.
Similarly when the number is divided by next number the ratio is .6180, divided by next to next number ratios is .3820, and so on.
This indicates the retracement.
Hence 1.618 is referred as golden mean/ golden ratio/ phi.
This can be used to understand the retracement level.
For Eg, If a stock rally from 300 to 350 levels – which is 50 points positive movement may have a set back of 61.8% of 50 = 30.6, Hence We can expect the stock to take support at 321 levels
<p style=”box-sizing: border-box; margin: 0.85em 0px; direction: ltr; color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”>moving average is a tool for identify the trend but it is not a decision making tool</p>
<p style=”box-sizing: border-box; margin: 0.85em 0px; direction: ltr; color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”>it shows a clear diagram of the price and help to identify bullish or bearish trend some times it may be correct or wrong</p>
<p style=”box-sizing: border-box; margin: 0.85em 0px; direction: ltr; color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”>we can take 21 days in moving average to calculate the trend it is performed in trend zone</p>
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