Leonardo Fibonacci (1170 - 1250) was a Middle Ages mathematician born in the Italian city of Pisa. He is best known for his “Book of Calculation” and the number sequence named Fibonacci Numbers.

In the Fibonacci sequence of numbers, each number after the first two is the sum of the previous two numbers. Thus, the sequence is 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, etc. Fibonacci ratios derived from this sequence of numbers are 0.382, 0.50, 0.618, 1.27 etc.

It is amazing how prevalent these numbers and proportions are in nature and man made structures. They have been found in the patterns of leaves, grass and flowers, and branching in bushes and trees. Fibonacci numbers can also be found in the arrangement of tines on a pinecone, in raspberry seeds and other natural areas. Genes too and enzymes often show Fibonacci patterns. These and so many other examples may have something to do with why it is felt that Fibonacci has a part to play in helping us to trade on the Forex market.

Fibonacci ratios are also widely applied in trading on the Forex market for various purposes. Usually they are applied to Forex charts to find out support and resistance levels, to predict entry and exit points, longevity of trends, trend reversals, creating stop-loss orders, profitable positions, etc. There are also many Forex trading systems built around these ratios. The four most popular Fibonacci trading applications are Fibonacci Arcs, Fibonacci Fans, Fibonacci retracements and Fibonacci time zones.

The best thing is that the Fibonacci price points, or levels, for any Forex currency pair can be calculated in advance so that the trader will know when to enter or exit the market. It is enough to figure out the previous trend's extreme points and by the help of the “Forex Fibonacci Levels” calculator, you will easily find the Support / Resistance levels.

Open this tool from Tools → Fibonacci Levels menu of Forex Strategy Builder. Simple enter both prices and the calculator will show you the most common levels.