There are a lot of articles about the "Golden Mean" or the "Golden Ratio" found in nature and in the stock market. This ratio is 1.618. This reciprical is 0.618. If this level is so important why is 50% used so often instead? Below is an attempt to explain "50%" in the world of 61.8%.
Below is a typical range from 0 to 100, with the 61.8% level indicated.
If you take 61.8% of the range from 61.8% to 0, you get 38.2% (which is another common fib level).
Take 61.8% of that range, you get 23.6%
And again, another 61.8% you get 14.6%.
Once you've determined all these "61.8%" ranges (when you could keep calculating into infiniti), take 61.8% of each of the smaller segments. These give us the ranges indicated in red. One of which is the not-so-talked-about 52.8% (61.8% of the range from 0.618 and 0.382). I personally have found this level to "fit" better when looking at movements within the markets than a straight 50%. Plus, it makes sense in keeping with the world of the "Golden Mean".
As an aside, another of my personal favorite fibonacci levels is the 0.786 level. To get this, you take the square root of 0.618. Nice.
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