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When used in technical analysis, the golden ratio is typically translated into three percentages: – 38.2%, 50% and 61.8%.
However, more multiples can be used when needed, such as 23.6%, 161.8%, 423% and so on.
There are four primary methods for applying the Fibonacci sequence to finance: retracements, arcs, fans and time zones.
Fibonacci series is 0,1,1,2,3,5,8,13,21,34,55,89,….
The difference between the consecutive numbers is 1.618
The number got when dividing a number by the second number in the right is 0.382 approximtely (8/21,13/34,….)
The number got when dividing a number by the third number in the right is 0.236 approximately(1/3,2/8,5/21,…..)
The golden ratio are 61.8%,38.2%,23.6%( arrived by the method above)
<p style=”color: #000000; font-family: sourcesanspro, sans-serif; font-size: 15px; -webkit-text-stroke-width: 0.15px;”>The Fibonacci sequence of numbers is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. Each term in this sequence is simply the sum of the two preceding terms and sequence continues infinitely. One of the remarkable characteristics of this numerical sequence is that each number is approximately 1.618 times greater than the preceding number. This common relationship between every number in the series is the foundation of the common ratios used in retracement studies.</p>
<p style=”color: #000000; font-family: sourcesanspro, sans-serif; font-size: 15px; -webkit-text-stroke-width: 0.15px;”>The key Fibonacci ratio of 61.8% – also referred to as “the golden ratio” or “the golden mean” – is found by dividing one number in the series by the number that follows it. For example: 8/13 = 0.6153, and 55/89 = 0.6179.</p>
<p style=”color: #000000; font-family: sourcesanspro, sans-serif; font-size: 15px; -webkit-text-stroke-width: 0.15px;”>The 38.2% ratio is found by dividing one number in the series by the number that is found two places to the right. For example: 55/144 = 0.3819.</p>
<p style=”color: #000000; font-family: sourcesanspro, sans-serif; font-size: 15px; -webkit-text-stroke-width: 0.15px;”>The 23.6% ratio is found by dividing one number in the series by the number that is three places to the right. For example: 8/34 = 0.2352.</p>
<p style=”color: #000000; font-family: sourcesanspro, sans-serif; font-size: 15px; -webkit-text-stroke-width: 0.15px;”>For reasons that are unclear, these ratios seem to play an important role in the stock market, just as they do in nature, and can be used to determine critical points that cause an asset’s price to reverse. The direction of the prior trend is likely to continue once the price of the asset has retraced to one of the ratios listed above. The price changes direction as it approaches the support/resistance levels.</p>
<span style=”color: #000000; font-family: sourcesanspro, sans-serif; font-size: 15px; -webkit-text-stroke-width: 0.15px;”> </span>The Fibonacci number series is as follows 0,1,1,2,3,5,8,13,21,34,55,89,144,233 etc. Each number is the sum of the two previous numbers and the sequence continues infinitely. The characteristics of this sequence is each number is approximately 1.618 times greater than the preceding number. The key fibonacci ratio 61.8% is referred as golden mean by dividing the one number followed by it in the series, for example:55/89=0.6179. It is similar to the 38.2% ratio and 23.6% which is obtained by dividing 2 and 3 places to the right.
Among the five fibonacci lines , 61.8 % is called golden line. whenever price goes up in an up trend , it retraces by usually touching the FIB line and then starting moving up , the same thing is applicable to down trend . The rally will lost only after touching FIB lines measured retracement . The fib lines are :- 38.2% , 50% , 61.8% .
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