Fibonacci is a broad topic and there are many different topics about Fibonacci with weird names. But our focus is on two things: Fibonacci reform and expansion.

Let us first introduce you to  Leonardo Fibonacci  .

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No, Leonardo Fibonacci is not a chef. In fact, he was a famous Italian mathematician, known as a scumbag.

He discovered a sequence of numbers, which created proportions to describe the natural proportions of objects in the universe.

Ratios are made up of the following series of numbers: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144

This series of numbers starts with 0, followed by 1 and then adding 0 + 1, which is the sum of 1, the third number is formed.

Then, the second and third numbers (1 + 1) are added to get 2, that is, the fourth number, and so on.

After the first few numbers in this sequence, if you measure the ratio of each number to the next higher number, you  will reach 0.618  .

For example, 34 divided by 55 equals 618%.

If you take the ratio between one number and the second number after that, you get  0.382

For example, 34 divided by 89 = 0.382.

You have now seen the Fibonacci sequence!

Fibonacci sequence

A Fibonacci sequence with 2 numbers, every 2 numbers! And add them together to form a third number.

Then the second and third numbers are added together again to form the fourth number.

And you can keep doing this until you get bored.

The ratio of the last number to the penultimate number is approximately equal to  1,618  .

This ratio can be found naturally in many objects, so  this ratio is called the golden ratio.

Such a thing has been shown many times in geometry, art, architecture and even Sonic the Hedgehog.

The golden ratio is actually a dumb number, like pi, often denoted by the Greek letter  phi  ( φ ) i.

All right, magic is enough.

With all these numbers, you can put the elephant to sleep. Let’s get to the point: the ratios you need to know are:

Corrective Fibonacci levels

0.236, 0.382, 0.618, 0.764

Expanded Fibonacci Levels (Fibonacci Extensions)

0, 0.382, 0.618, 1,000, 1,382, 1,618

You really do not need to know how to calculate all this. Your trading platform does all the work for you.

However, it is good to always be familiar with the main story behind the indicator or index. In this way, you will have enough knowledge in your meetings to show that you are someone for yourself. 🙂

Corrective Fibonacci levels work on the hypothesis that after a large price movement in one direction, the price returns to some extent to the previous price level and then continues in the main direction.

Traders use correctional Fibonacci levels as  potential support and resistance  areas.

Because many traders see the same levels and place their trades or stops in these areas, support and resistance levels automatically become important and act.

Traders use Fibonacci expansion levels to determine  profit margins  .

Again, since many traders consider these levels to record their profit margins, these tools are likely to work because of people’s analytical expectations.

Most technical software includes both correctional Fibonacci and extensible Fibonacci tools.

To apply Fibonacci levels to your charts, you need to identify the swing points of the ceiling and the swing of the floor.

A roof swing is a roof  candlestick that has at least two lower roofs on both its left and right sides.

Floor swing is a floor  candlestick that has at least two higher priced floors on both its left and right sides.

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