Warp,
Everything you wanted to know about Fibonacci--and more. A fun and fascinating site if you're into numbers. Actually, even if you are not. Fiboanacci wasn't into stocks. He was into rabbits, or the possible, number of rabbits that would result under theoretical (and improbable, although reality is bad enough) conditions. The ratio, 1.61538 is the asymptotically reached ratio of two successive Fibonacci numbers, and is called the golden number or golden ratio.
mcs.surrey.ac.uk
Apparently, the golden number, or golden ratio's, relationship to a stock's price movement, is, as you guess, the psychologically based tendency to follow one of nature's most predominant patterns, one is found in the spirals of a seashell and the packing of seeds in a sunflower.). However, since so many people are trading on the basis of TA these days, I wouldn't be surprised if correlation of a stocks' price movement up and down to the golden ratio has, to some extent, become self fulfilling.
<<The original problem that Fibonacci investigated (in the year 1202) was about how fast rabbits could breed in ideal circumstances.
Suppose a newly-born pair of rabbits, one male, one female, are put in a field.
Rabbits are able to mate at the age of one month so that at the end of its second
month a female can produce another pair of rabbits. Suppose that our rabbits never
die and that the female always produces one new pair (one male, one female)
every month from the second month on. The puzzle that Fibonacci posed was...
How many pairs will there be in one year?
1.At the end of the first month, they mate, but there is still one only 1 pair.
2.At the end of the second month the female produces a new pair, so now there are 2 pairs of rabbits in the field.
3.At the end of the third month, the original female produces a second pair, making 3 pairs in all in the field.
4.At the end of the fourth month, the original female has produced yet another new pair, the female born two months ago produces her first pair also, making 5 pairs.
The number of pairs of rabbits in the field at the start of each month is 1, 1, 2, 3, 5, 8, 13, 21, 34, ...
Fibonacci numbers and the Golden Number. If we take the ratio of two successive numbers in Fibonacci's series, (1, 1, 2, 3, 5, 8, 13, ..) and we divide each by the number before it, we will find the following series of numbers:
Fibonacci numbers and the Golden Number
1/1 = 1, 2/1 = 2, 3/2 = 1·5, 5/3 = 1·666..., 8/5 = 1·6, 13/8 = 1·625, 21/13 = 1·61538...
The ratio seems to be settling down to a particular value, which we call the golden ratio or the golden number. It has a value of approximately 1·61804.>>
Jim |
