Investors can use Fibonacci ratios in predicting future price movements. The ratios are derived from the Fibonacci series, which were named after an Italian mathematician named Leonardo Fibonacci who lived around 13th century AD.
Every term in the Fibonacci series represents a sum of the preceding two numbers (1, 1, 2, 3, 5, 8,13,…). An interesting feature of the Fibonacci series is that each number after 1 is about 0.6 times greater than the following number. The ratio between the two numbers in the Fibonacci series is termed as the golden ratio.