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Fibonacci numbers are a sequence of numbers in which each successive number is the sum of the two previous numbers:- 1, 1, 2, 3, 5, 8, 13 etc. You will notice that any given number is about 1.618 times the preceding number (and approx. 0.618 times the following number). Users of Fibonacci tend to focus on 4 theories - arcs, fans, retracements, and time zones, which are supposed to highlight reversals in trends as price near fibbo lines. If you are into day trading, the fibonacci levels (or 'fibbos' as they are sometimes called) may be of some use to you, although SureFireThing Camarilla Equation users tend to prefer the levels offered by the equation itself.

Fibonacci Arcs are created in the following way:- draw a line between two extremes (e.g a major peak and trough). Centering on the second extreme, circle 3 arcs which intersect the line at the Fibonacci levels of 38.2 percent, 50.0 percent, and 61.8 percent. Support and resistance is then supposed to be provided by the arcs.

Fibonacci Fans are created by once again drawing a line between two extremes. Next draw a vertical line thru th esecond point, and divide it by drawing lines from the first point to intersect the vertical at the Fibonacci levels (same percentages as before). These fan line are supposed to provide support and resistance.

Perhaps the most popular fibbo technique is retracements, created as usual by drawing a line between two extremes, then drawing nine horizontal lines that intersect the first line at the Fibonacci percentage levels of 0.0, 23.6, 38.2, 50, 61.8, 100, 161.8, 261.8, and 423.6. Prices tend to 'retrace' after significant moves, and the followers of Fibonacci levels claim that these levels are very accurate support and resistance guides.

Finally, time zones are vertical lines, spaced at Fibonacci intervals of 1, 2, 3, 5, 8, 13, 21, 34, and so on. Practicioners look for significant price action at or near these lines..