Thursday, April 6, 2006

Fibonacci Numbers

Fibonacci numbers are the result of work by Leonardo Fibonacci in the early 1200's while studying the Great Pyramid of Gizeh. The Fibonacci series is a numerical sequence comprised of adding the previous numbers together, i.e.,
(1,2,3,5,8,13,21,34,55,89,144,233 etc..)

An interesting property of these numbers is that as the series proceeds, any given number is 1.618 times the preceding number and 0.618% of the next number.
(34/55 = 55/89 = 144/233 =0.618) (55/34 =89/55 =233/144 =1.618), and 1.618 =1/0.618.

This properties of the Fibonacci series occur throughout nature, science and math and is the number 0.618 is often referred to as the "golden ratio" as it is the root of the following polynomial x^2+x-1=0 which can be rearranged to x= 1/(1+x). So that's were the fib # 0.618 comes from.

This number also figures prominently in the Da Vinci Code by Dan Brown

The other fibs 0.382 and 0.5 are commonly used in technical analysis of stocks. They have a less impressive background but are just as powerful in Technical analysis.
0.382=(1-.618)=(0.618*0.618) and 0.5 is the mean of the two numbers.

Other neat fib facts

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