Fibonacci whose full name is Leonardo Fibonacci who was also known as also known as Leonardo Bonacci, Leonardo of Pisa, or Leonardo Bigollo Pisano was a great mathematician who was born in 1170.
His father Guglielmo was an intalian merchant and custom official who also directs a teaodng post in Bugia Algeria. Whenever Gulglielmo travels Fibonacci goes with him as a young boy, it was during this period when he started getting education in Bugia he learnt about the Hindu-Arabic numeral system.
He realized the Hindu - Arabic system has advantage over the Roman numerals used then because it allows easy calculation.
He completed the Liber Abaci or book of calculations in 1202.
The republic of Pisa honoured Leonardo by giving him a salary that recognized him for the services he has rendered to the city as their financial advisor in the year 1240. He died between the year 1240 and 1240 in Pisa.
Fibonacci made the Hindu - Arabic numeral system popular in the western world through his creation of Liber Abaci in 1202. He also introduced sequence of Fibonacci numbers to Europe which was cited in Liver Abaci. He is an Italian mathematician from Pisa who is considered to be the most talented in the Western middle age.
His work Liber Abacisolved a problem which brought about a sequence of numbers later known as Fibonacci numbers. This Liber Abaci has been known and described by the Indian mathematicians in the sixth century but Fibonacci brought it to limelight.
In Fibonacci sequence, a number is gotten from the addition of the two previous numbers, he started the number with 1,2,3... But 0 and the first 1 has been added now. The calculation goes on and on till the thirteenth place with a value of 233.
GOLDEN RATIO
There is this special value that is used to describe the balance between everything in nature from the tiniest particle to the largest particle or substance on earth. Nature depends on this value to maintain equality and balance, this is also applicable to the financial market and this value is known as GOLDEN RATIO.
In the Fibonacci sequence, each number is the addition of the two previous numbers. For example as shown in this sequence ( 0,1,1,2,3,5,8,13...).
Our main concern is the ratio for the values that will yield the ratio 1.618 it the inverse which is 0.618. This golden ratio can also be died into the financial market and it has been done for years which is yielding results for financial traders.
A typical example in the natural world is to calculate the length of one's shoulder to his or her fingertip and dividing it by the length from ones elbow to his or her fingertip, the value gotten will.be around the golden ratio 1.618.
APPLICATION OF GOLDEN RATIO IN FINANCIAL MARKET
In financial market, analyst uses the golden ratio number to determine the support and resistance level of an asset price which is ussy reffered to as Fibonacci retracement, arc and fans and the time zone. On a chart the number is plotted against 0% to 100%.
Whenever an asset price increases or decreases significantly it's support and resistance level will be at or close to the golden ratio number.
APPLICATION OF FIBONACCI SEQUENCE ON TRADING VIEW
I know we must have been conversant with the usage of the trading view platform and how to find our way to the chart interface of the platform.
After navigating to the chart interface, we click on the indicator button and search for fib on the search bar, a pop up will be shown and we will select the indicator which is the Auto fib retracement.
You can then set the style and other settings you wish to set about the indicator to your own preference by double clicking on the lines when displayed on the chart.
The multiple lines drawn from 0 to 100 acts as the support and resistance, depending on where the price is located at the moment and where the price has been rejected recently will determine the resistance and support level.
MAKING INVESTMENT WITH THE FIBONACCI SEQUENCE
I will be using the fibonacci sequence to make an investment in the crypto market. Recently there has been a spike in the price of BTC and this has also made ALTs coin to also move with the trend.
The market is generally bullish and a lot of trader are happy about this movement, more traders are entering the market and it's even making it more greener. Looking at this fundamental analysis it is a good entry to enter the market and make an investment.
In this case I will be investing in EOS. Before investing in the project the price was at $4.6820 and it has touched and crossed the 61.8% level of the Fibonacci retracement which has been the resistance for the price asset, the breakout is a good signal to invest in the project.
So I have invested in the project, I will be doing a 12hrs, 24hrs and 48 hrs review after investment. This is a 4 hours chart frame.
12hrs Review after the investment
After the investment has been made, the price of the asset kept rising and it seems like a good investment. After checking the chart after 12 hours the price has moved from the entry price to $4.8674 and it has also crossed the 78.6% making that our new support and our resistance the 100%.
Looking at the trend of the market we are looking at having the price at 100% soon which I can either decide to take profit from my investment or leave it if the market seems good enough.
24hrs Review After the Investment
After 24 hours, the price has surge high to the 100% level fibonacci and Hass crossed the line as well. This is a good take profit level. Seeing that the price has been rejected at the 100% earlier before the crossing of the price. We need a confirmation to know if it's a fake breakout or if the trend will continue in the direction it is heading towards. We wait for 48hours to confirm our stand.
48hrs Review After the Investment
According to the chart after 48 hours we can see a retract in the price of the asset after getting to the 100% level. The price retracts due to the current fall in the price of BTC which is affecting other alts coin.
This can be taken for a correction. This is the reason why short term investors or traders are always adviced to take profit at the golden ratio value. If a trader at taken profits at the 100% level he won't have incurred any loss unlike one who didn't take profit.
Hopefully when the price hits the 50% level it might moves back to the opposite direction if not the fall goes down a bit more.
FIBONNACI EXTENSION
Fibonacci extension also called fib extension on trading view is a tool that usually calculate possible price of an asset following retraction. This tool also indicates possible support and resistance levels after retractment. These spots are pointed out based on the Fibonacci values and the price movement of the asset.
The conception behind Fibonacci extension is gotten rom the Fibonacci retractment and it's based on the theory of market retracing after moving towards a direction before continuing in that direction.
The tool can be found under indicator in the trading view and it's under the pine script. .
To calculate the fib extension, there is no particular formula since the levels are calculated based on Fibonacci values.
The most significant levels are the 61.8%, 100%, 161.8%, 200% and so on. This levels are the golden ratio of the sequence. There are certain points to look at in the fib extension
The parts Labelled 1,2 and 3 are the trend lines and retractment line. Those dotted lines drawn across the chart. 1 and 2 indicates the trend line while 2 to 3 indicates the retractment line.
With the use of Fib extension on trading view you do not need to draw these levels yours, it is customized to do so for you when you activate it. The level lines which take profit is usually depended on is the 0.618, 1.0 and 1.618 as seen in the screenshot above.
In conclusion, short term traders should set their take profit at the golden ratio levels and re enter the trade if they feel the price will surge more higher.
To be on a safer side after the trade has been placed a stop.loss should also be set to avoid much loss. The fibonnaci doesn't guarantee that all levels drawn will be reached by the assetm
Gracias por participar en la Tercera Temporada de la Steemit Crypto Academy.
Realizastes un buen esfuerzo, sin embargo, debes agregar mayor informacion y extenderte un poco mas en tus respuestas.
Continua esforzandote.
Espero seguir corrigiendo tus asignaciones.
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