Fibonacci theory
Some analysts use the Fibonacci sequence and its ratios to attempt to forecast and interpret the rhythms of markets.
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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

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
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
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.
-
8 of the best riverside properties for sale
The best riverside properties for sale – from a Grade II-listed former mill house with views over the River Chelmer in Essex, to a townhouse on a Georgian terrace overlooking the Avon Gorge in Clifton, Bristol
-
Will “Liberation Day” strike again?
Donald Trump’s 90-day tariff pause comes to an end on 9 July. Can we expect further market turmoil?