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The world of Fibonacci

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Fibonacci and Technical Analysis

Now that we have an understanding of Fibonacci series let us now discuss the importance of Fibonacci numbers in technical analysis.

Why is Fibonacci important in Technical Analysis? 

Technical analysis is a vast and diverse field of analysis. It has many tools that make it a successful method to analyze stock markets. The Fibonacci series is one such tool which has stood its test of time. We have already seen above that this series can be witnessed everywhere around us in the universe, including human beings. 

To identify support and resistance levels, this sequence plays an important role in technical analysis.

The common Fibonacci numbers are 38.2%, 50%, and 61.8%. The repetitious results that have become apparent through centuries of investment habits indicate that these numbers are significant when applied to human emotions.

The Fibonacci numbers are the crucial numbers for the Elliott wave analysis. They play a major role in analyzing the way you think and how your emotions play a role in your trading decisions. 

In our upcoming units, we will discuss the different Fibonacci tools used for technical analysis, such as:

  • Fibonacci Retracement 
  • Fibonacci Extensions
  • Fibonacci Fans
  • Fibonacci Arcs
  • Fibonacci Projections
  • Fibonacci time zones

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