Chapter 1 Leonardo Pisano "Fibonacci"
There are lots of tools used in technical analysis to help predict the future of market trends. Among them are Fibonacci retracements and extensions, which are tools based on a string of numbers called the Fibonacci sequence.
Fundamental to understanding the golden ratio and other methods to describe the natural world, the Fibonacci sequence was popularized in the West by Leonardo Pisano Fibonacci, an Italian mathematician from Pisa who lived at the turn of the 13th century.
You probably remember this from your school days. The Fibonacci sequence starts as follows: 1, 1, 2, 3, 5, 8, 13 and so on, where each number is the sum of the two preceding numbers. Imagine a zero at the beginning to get started, e.g. 0+1=1, 1+1=2, 1+2=3, 2+3=5, and so on.
The sequence has numerous applications in many fields of science. In technical analysis, however, it is most commonly encountered in the Fibonacci retracement and Fibonacci extension tools.
