Why does Fibonacci work in trading?
It all started in 1202 when Leonardo of Pisa — better known as Fibonacci — introduced the world to an intriguing sequence of numbers: 0, 1, 1, 2, 3, 5, 8, 13… Each number is the sum of the two preceding ones. Simple, right? Nevertheless, this sequence uncovered one of nature's greatest secrets.
The Fibonacci sequence appears everywhere: the spiral of a shell, the petals of a sunflower, the branching of trees — even the structure of galaxies. These patterns align with the golden ratio (1.618), a universal blueprint for balance and proportion.
How is Fibonacci applied in trading?
Markets, like nature, are driven by psychology and patterns. Traders rely on Fibonacci levels to identify key price levels where trends may pause, reverse, or continue.
Golden pocket: the sweet spot for traders
The "golden pocket" is located between the 61.8% and 65% retracement levels — a magnet for reversals. This is where buyers or sellers often congregate, creating high-probability setups.
