In Europe, it was the solution to a problem of rabbit breeding described in the book Liber Abaci by the Italian mathematician Leonardo of Pisa in 1202 A.D. The pattern hides a powerful secret: If you divide each number in the sequence by its predecessor (except for 1 divided by 0), then as you move toward higher numbers, the result converges on the constant phi, or approximately 1.61803, otherwise known as the golden ratio. The Fibonacci sequence is a famous group of numbers beginning with 0 and 1 in which each number is the sum of the two before it. While using these numbers to predict market movements is a lot less certain than using it to calculate sunflower seed patterns, the appearance of the sequence in the field of finance is yet another testament to its power in capturing the human imagination. This technique is named after and derived from the famous Fibonacci sequence, a set of numbers with properties related to many natural phenomena.

“Fibonacci retracement” is a tool that technical analysts use to guide their outlook about buying and selling behavior in markets.

stock market closed out its worst week since 2008 amid coronavirus-related turmoil (before recovering somewhat early the following week), investors were left with a glaring question: Is it all downhill from here? Amid such economic turbulence, some market researchers look to a familiar, powerful set of numbers to predict the future.

Images of fibonacci sequence in nature