# Understanding the Financial Market charts using ancient mathematics legacy.

### The Fibonacci.

The Fibonacci Sequence is the series of numbers:

0, 1, 1, 2, 3, 5, 8, 13, 21, 34, …

- The next number is found by adding up the two numbers before it.
- The 2 is found by adding the two numbers before it (1+1)
- The 3 is found by adding the two numbers before it (1+2),
- And the 5 is (2+3),and so on!

Here is a longer list:

0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181, 6765, 10946, 17711, 28657, 46368, 75025, 121393, 196418, 317811, …

Can you figure out the next few numbers?

In terms of application Fibonacci number appears in nature often.

The number of petals on a flower is typically a Fibonacci number.

are the number of spirals on a sunflower or pineapple tends to be a Fibonacci number as well

In fact, there is much more application of Fibonacci numbers but what

I find most inspirational about them is their NUMBER PATTERN

square each Fibonacci number

One square is one

Two squares is four

Three squares is nine

Five square is twenty-five. And so on

Now no wonder when you add previous two number you get next Fibonacci number.

Try doing the following.

Add the squares together(refer the below picture)

1+1=2

1+4=5

4+9=13

9+25=34

And the pattern continues.

And try doing this too…

Add the first few squares of few Fibonacci numbers.

6, 15, 40, 104 are not Fibonacci numbers

But if you look closely you will see Fibonacci number buried inside that.

6=2*3

15=3*5

40=5*8

104=8*13

Let’s look at the following equation.

why should the square of

1 +1+2+3+5+8=8*13

Let’s understand by drawing a simple picture

Let’s start with one by one square next to that draw another one by one square together

one by two rectangle.

below that draw two by two square and three by three square

five by five square and eight by eight square

creating one giant rectangle.

Now say what is the area of a rectangle.

from first point the “It’s the sum of the areas of square inside it.

and another point is

The area is equal to its hight*base

and the height is clearly 8.

and the base is 5+8 which is the next Fibonacci number 13.

hence the square of 1,1,2,3,5,8 add up to 8 times 13.

Continue this process to generate rectangles of 13*21 & 21*34 and so on

Now divide 13/8=1.625

and if you divide the larger number by smaller number these ratio gets closer and closer to about 1.618

Known to many peoples as

THE GOLDEN RATIO

The number which fascinated mathematician, scientist, and artist for centuries.

All this explains to us clearly there is so much these Fibonacci numbers can do while trading.

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