Fibonacci retracement intervals are calculated based on “phi” which is 1.618.
The Fibonacci sequence is 1,1,2,3,5,8,13,21,34,55,89,144,…..
Take a term of the sequence and divide by the prior term. You will get a number that is very near to 1.618. The following mathematical operations show you how some unique decimal values can be arrived at using phi. These values can be seen time and again in stock price charts.
1/Sq root (1.618) = 0.786
1/1.618 = 0.618
Sq Root 0.236 = 0.486
1/(1.618)^2 = 0.382
1/(1.618)^3 = 0.236
In this chart segment of the S&P 500, price declined from Jan 2022 to late February and then rebounded into March 2022. The rebound/retrace was 78.6% of the decline. The S&P then declined into June 2022 before rebounding by 61.8% into August 2022.
This is but one example of Fibonacci at work.
More recently, we have seen a small drawdown on the S&P 500.
Was this drawdown related to Fibonacci math? What caused this drawdown to start in the first place? Where are we in the McWhirter cycle? What does the immediate future look like?
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