📏 Fibonacci Analysis

Fibonacci analysis, named after the famous Italian mathematician Leonardo da Pisa, known as Fibonacci, are based on a unique numerical sequence where each number is the sum of the two preceding ones (1, 1, 2, 3, 5, 8...), finding applications across various aspects of nature and the universe.

In trading, Fibonacci levels are employed to identify potential support and resistance points on financial asset price charts. The primary Fibonacci-derived tools used in trading are three: retracements, extensions, and fans.

1) Fibonacci retracements help traders identify potential support or resistance levels. These levels are calculated after a market has made a significant move up or down and appears to be correcting that movement.

2) Fibonacci extensions are used to determine how far the next price movement might continue after a correction.

3) Lastly, Fibonacci fans provide angular guidelines based on the sequence that help predict future support or resistance areas.