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# Fibonacci Moving Average Crossover Strategy

## Moving average crossover using the Fibonacci numbers

Hey there!

Among many interesting patterns found in the stock markets, a set of numbers particularly stands out - **the Fibonacci series aka the ‘magic numbers’.**

### 🪄 What is the Fibonacci series?

The Fibonacci series, developed by an Italian mathematician in the 13th century is a sequence of numbers, starting with 0 and 1, such that **each number is equal to the sum of the preceding two numbers**. This interesting pattern found in the number of petals of flowers and spiral galaxies in space, has found uses in trading.

So we did some work and **found the following stocks** taking help from the Fibonacci series. Read on to find out more about Fibonacci numbers and the strategy we used…

➡️ You must remember discussing the moving average crossovers strategy in our previous emails. To recap, a shorter-term average line crossing above a longer-term average line signals a bullish trend, and a shorter-term average line crossing below a longer-term average line signals the opposite.

➡️ Combining the above concept with the Fibonacci series, we get a Fibonacci Moving Average Crossover strategy. The Fibonacci Moving Average is an **equally weighted exponential moving average using the lookbacks of selected Fibonacci numbers. **

➡️ This strategy uses the **intersection of four exponential moving averages** (EMAs) with periods corresponding to the Fibonacci numbers (5,8,13,21) to find trading signals.

➡️ For example, if the 5-day EMA crosses above the 8-day EMA, 13-day EMA, and 21-day EMA, then it is a **bullish pattern indicating a buy signal**. Conversely, if the 5-day EMA crosses below the 8-day EMA, 13-day EMA, and 21-day EMA, then it is a **bearish pattern indicating a sell signal**.

➡️ Note that this strategy **works well as a support and resistance level during a strong trend**, but *not when the market is going through a prolonged sideways trend.*

✅ It is recommended to use this strategy **in combination with other technical analysis tools** for more reliability.

📌 Learn more about trading strategies using the Fibonacci numbers and other indicators in the Basics of Technical Analysis Course by Mr. Khagesh Agarwal for just **₹349** **(use NL30 for 30% off at checkout).**

**None of the above stock ideas are intended as recommendations. Please consult a registered advisor before buying/selling.**

*✍🏼* If you have any questions or just want to say hi, feel free to write to us at [email protected]

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