TECHNICAL ANALYSIS (TRD)

A few indicators that we feel we should mention, due to their popularity, are:
Bollinger Bands, Fibonacci retracement, moving averages, moving average
convergence divergence (MACD) and stochastics.
The Fibonacci Sequence is a series of numbers that seem to consistently occur in
nature. The discovery of this phenomenon is credited to the 13th century mathematician,
Leonardo Fibonacci.

The method to calculate the sequence is to add any Fibonacci number together with the
number that immediately precedes it in the sequence.

Using this formula, and assuming the first two numbers are zero and one, you can
calculate the first ten numbers in the Fibonacci Sequence as follows:

0+0=0
0+1=1
1+0=1
1+1=2
2+1=3
3+2=5
5+3=8
8 + 5 = 13
13 + 8 = 21
21 + 13 = 34
Therefore, the first ten numbers in the Fibonacci Sequence are: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34.

Fibonacci Ratios

From the Fibonacci Sequence comes a series of ratios, and it is these ratios that are of
special significance to traders.

The most important Fibonacci ratio is 61.8% - it is sometimes referred to as the "golden
ratio" or "golden mean" and is accepted as the most "reliable" retracement ratio.

The Golden Ratio is arrived at by dividing any number in the sequence by the number
that immediately follows it. No matter which number you choose, the answer will always
be very close to the mean average of 0.618, or 61.8%. For example:

8 divided by 13 = 0.615 = 61.5%

13 divided by 21 = 0.619 = 61.9%

21 divided by 34 = 0.617 = 61.7%

The other two Fibonacci Ratios that forex traders use are 38.2% and 23.6%. These two
ratios seem to have a lower level of success, but are still included for analysis purposes.

The 38.2% ratio is derived by dividing any number in the sequence by the number
found two places to the right. For example:

8 divided by 21 = 0.380 = 38.0%

144 divided by 377 = 0.381 = 38.1%

6765 divided by 17,716 = 0.381 = 38.1%

In a similar fashion, the 23.6% ratio consists of any number in the sequence divided by
the number that is three places to the right:

5 divided by 21 = 0.238 = 23.8%

34 divided by 144 = 0.236 = 23.6%

6765 divided by 28,667 = 0.235 = 23.5%