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Thank you, Professor, @imagen, for your lecture on the Fibonacci retracement. I have always enjoyed the way you simplify your courses for easy understanding.
I am here to submit my homework for this week and as your directed, I will be writing on the following:
Who is Fibonacci?
Most important contribution of Fibonacci in the field of Mathematics
History and Description of the Golden Ratio
The use of Fibonacci in Tradingviews
Determined Fibonacci levels with a timeframe of 4 hours for 48 hours
Fibonacci Extensions
Conclusion
History shows that Leonardo Pisano Fibonacci (1170–1240 or 1250) was a renowned number theorist from Italy. he was born in the year 1170 in Pisa town, Italy. his father was Guglielmo.
He studied mathematics in Bugia, Algeria, located in North Africa. Fibonacci has contributed a lot in the field of mathematics, as will be seen in the next sub-topic.
One of the most important contributions of Fibonacci is the decimal number system (Hindu-Arabic numbering system), which has replaced the Roman numeral system. Not many people know that it was Fibonacci that introduced decimals to the world of mathematics.
This decimal numbering system has open doors of precision in mathematics, creating place values for conventional numbering of items and digital assets.
The Golden ratio is also known as golden section, golden mean, or divine proportion. It is also known as the irrational number in mathematics. It could be denoted as (1 +√5)/2. it is usually represented by the Greek letter ϕ or τ and it is approximately equal to 1.618.
The Golden ration is the ration of a line that had been cut into two different lengths. This is done in such a way that the ratio of the complete segment to the longer segment is equal to the ratio of the longer segment to the shorter segment. Simply put, Golden ratio is : whole segment/longer segment= longer segment/shorter segment.
To describe it in current mathematical format, let:
Length of shorter segment = 1
Length of longer segment =x (Unknown)
This gives us the equation (x+1)/x=x/1 and can be rearranged as x2-x-1=0 (quadratic equation), which has its positive solution as x = (1 +√5)/2 which is the Golden ratio.
History
The golden ratio or golden section was first used by Martin Ohm in 1835. This is found in the second version of his book: Die Reine Elementar-Mathematik (Livio 2002, p. 6). According to history, The first known use of this term in English is in James Sulley's 1875 article on aesthetics in the 9th edition of the Encyclopedia Britannica.
The symbol phi, which represents the numerical value of the Golden ratio was first used by an American mathematician, Mark Barr early in the 20th century during the commemoration of the sculptor from Greek, Phidias (490-430 BC).
His name was used as a symbol because several historic claims show that he made extensive use of the golden ratio in his work. Also recognized was Fibonacci, whose name the first letter corresponds with the Greek letter phi.
The first step is to draw two horizontal lines on the two extremes of resistance and support. Then the vertical distance between the two lines drawn can be divided into four sections on the ratios of 23.6%, 38.2%, 61.8%, and 100%.
These levels are drawn to act as resistances and supports during price movements. The illustration is seen on the graph below:
From the graph below, during the 24 hours, at point A there is a strong price reversal at 100% level after a resistance. This is followed by support at B that took the price to another resistance at D.
Screenshot taken from Binance exchange
It could be noted that the resistance and support between points B and E happened at levels 23.6% to 61.8%.
Point F is the meeting point for the two trades of 24 hours each. While points A to E is the first 24 hours chart, points G to I is the second 24 hours chart, making it a 48 hours analysis of BTC/BUSD.
These are values on the chart that are less than zero. They serve as a way of establishing price targets or to find projected areas of support and resistance when the price moves to areas beyond the confines of Fibonacci percentages drawn.
It could be noted that if the price moves towards these external areas, it could continue in that direction. Thus Fibonacci extensions are possible interests.
A Fibonacci retracement strategy is an age-long tool used by traders in their technical analysis of price behavior. This tool applies to stock, forex, and cryptocurrency trading. Although it cannot give a 100% price prediction, it has proven to be reliable over time.
With the provision of the extensions, it is possible to remain on track when the prices go out of the Fibonacci levels.
This tool is a simple one to use and can easily be adopted by new coming traders.
Thank you for reading.
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Thank you. I will surely do better next time.
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hey @greatness96, please write to me on whatapp 08180112427
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