Fibo-nonsense or Fibo-fact?

By Kenneth Robson on June 16, 2012 • ( 0 )

Does the employment in technical analysis of the mathematical sequence of numbers known by the name of Fibonacci have any rational explanation?

Critics regard it as an example of the unscientific aspect of technical analysis. How could any one number, or sequence of numbers, be more significant than any other.

Fibonacci is the commonly known name of an Italian mathematician Leonardo Pisano Bigollo born around 1170 to Guglielmo Bonacci, a wealthy merchant who had a trading post in Bugia (the Italian name for Bejaia, a Mediterranean port near Algiers in Algeria). In his travels in Africa as a young man he learned from Islamic mathematicians of the day about Hindu-Arabic numerals.

He published in 1202 a book known as” Liber Abaci” meaning “The Book of Calculation”. This book helped to establish the superiority of the Arabic system of numerals. It contained many systems for calculation such as lattice multiplication, currency conversion, and the calculation of profit and interest. The Fibonacci number sequence he arrived at by studying the likely increase of rabbit pairs over a 12 month period. I am indebted to Wikipedia for this information.

Many curious observations have been made about this sequence of numbers, and its occurrence in nature. Whether you are a believer or a sceptic when it comes to an application in technical analysis, it is a topic worthy of further investigation.