Discovered long before there were stock markets, the Fibonacci method has proved tobe useful for traders.One of the key goals of stock market traders is to find a way out of the maze of thestock market. Toward this goal, traders have resorted to using astrology, rocket science,fundamental analysis, technical analysis, and more to achieve this goal. The Fibonaccimethod is one such attempt to unravel the mysteries of the stock market, in this case byrelating the market's movements to the Fibonacci series. Fibonacci series were iscoveredlong before there were stock markets, but they relate amazingly well to the stockmarkets and other natural phenomena.Leonardo of Pisa, a 13th-century Italian mathematician better known by his nickname,Fibonacci, is credited with the creation of the Fibonacci series. The series has its first twonumbers as zero and 1. You arrive at the remaining numbers by adding the previous twonumbers.For example:0+1=11+1=21+2=32+3=53+5=85+8=138+13=2113+21=3421+34=5534+55=89 and so on.Thus, we arrive at a series of numbers: zero,1,1,2,3,5,8,13,21, 34, 55, 89.These numbers are related to each other by a ratio. Many phenomena in nature,science, and astrology can be explained by using this property of the Fibonacci numbers.Fibonacci numbers also have an interesting relationship with each other. Using the sumsfrom the examples above, we get 21/34 = 0.618; 34/55 = 0.618; 55/89 = 0.618.Similarly, 34/21 = 1.618; 55/34 = 1.618, 89/55 = 1.618. This ratio is known as thegolden ratio and forms the basis of the Fibonacci methods in technical analysis.The other two fractions, 0.382 and 0.5, most commonly used in technical analysis arecalculated as follows:(1 - 0.618) = 0.382 and 0.5 is the mean of 0.382 and 0.618.