What are the conditions of Fibonacci in finance?

Fibonacci ratios are the result of the division of Fibonacci series members, and their members are their successors or preceding. Fibonacci ratios are used in technical analysis of their own capital and other financial and commodity markets as a means of recognizing and predicting formulas in price movements. More specifically, they are used to identify the level of price support and resistance and potential turnover points in price trends as well as to predict the longer -term market movements. The division of one member of the Fibonacci series another in the sequence, starting with 55 and 89, provides approximately 0.618, whose inversion is known to mathematicians as phi or gold ratio. The following series in the series, obtained by dividing one issue by the other and third subsequent members of the series, provides 0.382 and 0.286, all of which are used to determine potential turnover points in price trends. The actual accountant and mathematician of the 13th century Leonardo Fibonacci. Their first application for financial markets is attributed to themna r.n. Elliot, telegraph operator from the end of the 19th century, director of the railway and accountant. Later in life, Elliot used them to analyze trends in the stock market prices and came up with what is called Elliot Wave Theory. Robert Prechter, a professional stock market, has again popularized the theory of Elliott Wave Theory in the 80s, when he re -published all Elliott's work and used them as a basis for his own investment service.

Elliot waves theory stipulates that stock market prices of trend up and down in five -wave samples whose turnover points correspond to the ratio of fibonacci. The first main wave is followed by the second wave in the opposite direction, usually downloading 61.8% of the initial wave. The third wave in the original direction is usually the largest. The fourth wave will move again against the original trend, followed by the last, fifth wave in the original direction. Fibonacci ratios tend to mark turnover points in the VL seriesn.

Fibonacci ratios are also used to identify the so -called levels. These levels of price promotion and resistance levels. They correspond to Fibonacci ratios of 0.618, 0.382 and 0.236 multiplied by the market and trough values. In addition to Fibonacci ratios, many traders also use 50% and 78.6% to indicate the levels of potential support and resistance.

Fibonacci adherents and Elliot Wave Theories are zeal in their faith. They usually attribute the failure of theory to its application incorrectly rather than evidence that it is not always or generally valid. Others acknowledge that Fibonacci and Elliot methodologies are valuable and can give traders a "edge", but do not believe in them so much. After research, one investment group found that the level of support and resistance to Fibonacci and the theory Elliot waves will provide accurate forecasts of only about half of the time.