Leonardo Fibonacci was a mathematician who lived in the 1100's. He studied Egypt's Great Pyramid of Gizeh. In his studies, he discovered the unique relationship between a series of numbers. These numbers are now referred to as Fibinacci numbers.
The Fibonacci number sequence develops by starting at 1, and adding the previous number. The sum is the new number, for example: 0+1=1, 1+1=2, 2+1=3, 3+2=5, 5+3=8, 8+5=13. Therefore, Fibonacci numbers are 1, 2, 3, 5, 8, 13, 21, 34, 55, and so on.
"How fascinating" you might mutter, scratching your head. "But what's that got to do with me and making money in the market?"
Plenty. Especially when it comes to the numbers 2, 3, and 5. From now on, we're going to keep the numbers 2, 3, and 5 uppermost in our minds. These numbers pop up repeatedly in charts.
Stocks in strong uptrends tend to move up three days, then down for two. Or they move up for five days, then down three. In a downtrend, reverse those numbers. A probable pattern is three days down, two days up, or rebound. Or five days down and three days up.