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Fibonacci Sequence

Introduction
Fibonacci was a 14th century mathematician who studied repeating numerical sequences found in nature. These sequences (or summations) are known as Fibonacci Numbers and Fibonacci Derivatives.

The series of Fibonacci numbers are created by adding a number to the previous number.  1+1=2.  2+1=3.  3+2=5.  5+3=8.
So the first Fib numbers are 2, 3, 5 and 8. The series therefore continues with 13, 21, 34, 55, etc.

Fibonacci derivatives are found by taking a Fibonacci number and dividing it by the previous consecutive numbers. Let's illustrate using the Fibonacci numbers 3, 5, 8, 13 and 21.

Therefore the sequence of Fib derivatives (sometimes referred to as Fib ratios) is 1.6, 2.6, 4.2, 6.9, 11, 18, etc.

Analytical Application
Fib numbers can be applied in technical analysis for seeking out areas of support and resistance as well as calculating retracement levels. Much of Elliott Wave Theory is based on the Fibonacci Sequence Series.

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