Fibonacci theory

In 1202, medieval mathematician Leonardo of Pisa – nicknamed Fibonacci – came up with an elegant sequence of numbers in which each number equals the sum of the two before it in the series. It starts with 0, to which you add 1 to get the next number, 0 + 1 = 1; then just carry on, so 1 + 1 = 2; 1 + 2 = 3; 2 + 3 = 5. It quickly reaches huge figures.

The sequence appears in nature – for example, in the head of a sunflower or in pine cones – as well as in mathematical theory and design. The theory is that, in markets, interesting things happen at Fibonacci-sized intervals, so analysts use the sequence and its ratios to forecast and interpret the rhythms of markets.

• See John C Burford’s spread betting video tutorial: Trading with Fibonacci levels.

Merryn

Claim 12 issues of MoneyWeek (plus much more) for just £12!

Let MoneyWeek show you how to profit, whatever the outcome of the upcoming general election.

Start your no-obligation trial today and get up to speed on:

  • The latest shifts in the economy…
  • The ongoing Brexit negotiations…
  • The new tax rules…
  • Trump’s protectionist policies…

Plus lots more.

We’ll show you what it all means for your money.

Plus, the moment you begin your trial, we’ll rush you over THREE free investment reports:

‘How to escape the most hated tax in Britain’: Inheritance tax hits many unsuspecting families. Our report tells how to pass on up to £2m of your money to your family without the taxman getting a look in.

‘How to profit from a Trump presidency’: The election of Donald Trump was a watershed moment for the US economy. This report details the sectors our analysts think will boom from Trump’s premiership, and gives specific investments you can buy to profit.

‘Best shares to watch in 2017’: Includes the transcript from our roundtable panel of investment professionals – and 12 tips they’re currently tipping. The report also analyses key assets, including property, oil and the countries whose stock markets currently offer the most value.