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Artists are familiar with the Fibonacci or Golden Ratio. Admittedly, the rest of the world got to know about Fibonacci through The Da Vinci Code book that became a hit movie.

It should be known, however, that Fibonacci is more than an art or mathematical term; it is also a financial term.

What is so compelling about Fibonacci?

Fibonacci, according to studies, occur in nature. The Golden Ratio that results from the Fibonacci sequence is 1.618. Many natural occurrences provide the number 1.618.

For example, the number of female bees divided by the number of male bees found in the same hive produces the Golden Ratio.

Then, the length from your shoulder to fingertips divided by the length from your elbow to your fingertips should give you the same result. Fibonacci seems ingrained in nature.

What makes Fibonacci helpful in technical analysis ib Forex Trading?

Fibonacci can be useful in doing a technical analysis of the financial market, believe it or not. Through patterns employing arcs, fans, retracements, and time zones, the Fibonacci sequence can be observed.

The numbers from the sequence occur after there has been a significant change in price. From the Golden ratio, the following percentages should be noted: 38.2, 50, 61.8, and their multiples.

Fibonacci retracements show that the patterns do touch on any of those given numbers or on their multiples after the significant price change.