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.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.