What is Fibonacci?
Fibonacci is a sequence of numbers defined by a series of natural numbers in which each number is the sum of the two preceding numbers. The Fibonacci sequence starts with two numbers, 0 and 1 (or 1 and 1), and the next numbers are calculated by adding the two preceding numbers.
Specifically, the Fibonacci sequence is: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, …
For example, to calculate the next number in the Fibonacci sequence after 8, we add 5 (the preceding number) and 8 together, resulting in 13. Continuing like this, we add 8 and 13 to get 21, and so on.
The Fibonacci sequence is one of the most common number sequences and has wide applications in many fields such as mathematics, computer science, economics, and many other areas.
Fibonacci in financial investment
Fibonacci is used as important milestones in the Technical Convergence method. Those milestones are: 14%, 38.2%, 61.8%…
There are many Fibonacci tools that can help investors in trading on the market such as Fibonacci retracement, trend-based Fibonacci extension, Fibonacci time, Fibonacci resistance in fan shape, etc. However, two types of Fibonacci are commonly used by investors because of their easy application and flexibility: Fibonacci retracement and Fibonacci expansion.
Fibonacci retracement helps identify price levels where trend reversals may occur. In an uptrend, there will be times when prices grow strongly; however, there will also be times when the market corrects, providing opportunities for investors to adjust their campaigns. At this time, Fibonacci retracement will help identify support levels – where prices will end the correction and reverse upwards. This is also similar to downtrends.
Fibonacci expansion helps investors predict future price levels that a trend may reach. In other words, Fibonacci expansion will determine the limits of the main trend after the end of the correction.
How to apply Fibonacci in the financial market according to the Technical Convergence method
For both Fibonacci retracement and Fibonacci expansion, the sure step investors need to take is to identify waves.
Following the Technical Convergence method, Fibonacci retracement is used by drawing from one wave to the next wave of the same level. Look at the figure below to understand more clearly.
Similarly, with Fibonacci expansion, we also select 3 starting points of waves at the same level.
Although Fibonacci is a powerful tool, accurately determining wave points is not for everyone. That’s why learning and applying the Convergence Technical method is very important. If you truly want to understand and apply Fibonacci effectively, investors should consider participating in an in-depth course on this topic.
With knowledge and skills in using Fibonacci, investors can maximize this tool to make smart and profitable investment decisions. If you want to learn more about applying Fibonacci and other powerful tools such as applying candlestick patterns to the market, confirmation systems,… according to the Convergence Technical method, investors can refer to reputable content here.
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