Fibonacci Analysis

Fibonacci analysis is one of the widely used technical analysis models used by traders today. Based on previous price patterns, technical analysts set support levels (lower price bounds) and resistance levels (higher price bounds) to plot their trading strategies. Fibonacci analysis is derived from the number sequencing methodology created by medieval mathematician Leonardo Pisano. The number sequencing applied by Fibonacci analysis to financial market price patterns is based on 1.618, which is widely found in nature. Fibonacci analysis is used by currency and bond traders to determine the elasticity of price movements, using analytics such as Fibonacci retracements, projections and extensions. Fibonacci extensions are used to set upper and lower price targets.