The Fibonacci Spiral
The curious set of numbers shows up in nature and also in human activities.
On Friday, as the U.S. stock market closed out its worst week since 2008 amid coronavirus-related turmoil (before recovering somewhat early this week), investors were left with a glaring question: Is it all downhill from here? Amid such economic turbulence, some market researchers look to a familiar, powerful set of numbers to predict the future.
“Fibonacci retracement” is a tool that technical analysts use to guide their outlook about buying and selling behavior in markets. This technique is named after and derived from the famous Fibonacci sequence, a set of numbers with properties related to many natural phenomena. While using these numbers to predict market movements is a lot less certain than using it to calculate sunflower seed patterns, the appearance of the sequence in the field of finance is yet another testament to its power in capturing the human imagination.