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Fibonacci

In the 13th Century, an Italian mathematician named Leonardo Fibonacci made a remarkable discovery: Rabbits, when placed in an enclosed area for one year, will reproduce a new pair of kits in a very precise, repetitive pattern. Fibonacci also contributed to the science of numbers, and introduced the "Fibonacci sequence"

The Fibonacci sequence is the sequence 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, introduced in his work "Liber abaci" in a problem involving the growth of a population of rabbits.
Aside from this sequence of number where every next number is the sum of the proceeding two, 0, 1 (0+1), 2 (1+1), 3 (2+1), 5 (3+2), 8 (5+3), 13 (8+5), etc.
There are the "Fibonacci ratios".. By comparing the relationship between each number, and each alternate number, and even each number to the one four places to the right, we arrive at some fairly consistent ratios.. The important ones are .236, 50, .382, .618, .764, 1.382, 1.618, 2.618, 4.236, and for good measure we include 1.00 ..




It turns out that the ratios are mathematical principles prevalent in nature around us, and is also in man-made objects. There are many interesting, entertaining, and poetic observations about Fibonacci numbers and ratios in the universe. Fibonacci numbers appear in ancient buildings, in plants, planets, molecules, the dimensions of human bodies, and of course snails… But of what use is all that to the lowly trader?

In the 20th Century, American efficiency expert Ralph Nelson Elliott furthered the scope of the pattern's reach by identifying the Fibonacci sequence as the mathematical basis for the ebb and flow of stock prices on financial charts. This then became the foundation for the Elliott Wave Principle.


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