At Probabull we use Fibonacci retracement levels to guide our setup strategies. Interestingly the Fibonacci golden ratio can be seen not just as a useful trading tool but also occurs across nature and evolution. This can be seen in the formation of shells, tree branches and even the dimensions of the human body.

Considered as the most prominent mathematician of his time, Leonardo Fibonacci devised a mathematical formula based on a number sequence resulting in the golden ratio. This number sequence is derived by adding the previous 2 numbers (0,1,1,2,3,5,8,13,21,34…) to create the next number in the sequence.

The golden ratio can then be calculated by taking 2 consecutive numbers from the sequence and dividing them (144/233 = 1.618). This golden ratio allows us to gauge naturally occurring behaviour in stock price movement.