What Are Fibonacci Extensions?
Fibonacci extensions are a tool that traders can use to establish profit targets or estimate how far a price may travel after a pullback is finished. Extension levels are also possible areas where the price may reverse.
Key Takeaways:
Common Fibonacci extension levels are 61.8%, 100%, 161.8%, 200%, and 261.8%.
The Fibonacci extensions show how far the next price wave could move following a pullback.
Fibonacci ratios are common in everyday life, seen in galaxy formations, architecture, as well as how some plants grow. Therefore, some traders believe these common ratios may also have significance in the financial markets.
Extension levels signal possible areas of importance, but should not be relied on exclusively.
The Difference Between Fibonacci Extensions and Fibonacci Retracements
While extensions show where the price will go following a retracement, Fibonacci retracement levels indicate how deep a retracement could be. In other words, Fibonacci retracements measure the pullbacks within a trend, while Fibonacci extensions measure the impulse waves in the direction of the trend.
Fibonacci extensions are a tool that traders can use to establish profit targets or estimate how far a price may travel after a pullback is finished. Extension levels are also possible areas where the price may reverse.
Key Takeaways:
Common Fibonacci extension levels are 61.8%, 100%, 161.8%, 200%, and 261.8%.
The Fibonacci extensions show how far the next price wave could move following a pullback.
Fibonacci ratios are common in everyday life, seen in galaxy formations, architecture, as well as how some plants grow. Therefore, some traders believe these common ratios may also have significance in the financial markets.
Extension levels signal possible areas of importance, but should not be relied on exclusively.
The Difference Between Fibonacci Extensions and Fibonacci Retracements
While extensions show where the price will go following a retracement, Fibonacci retracement levels indicate how deep a retracement could be. In other words, Fibonacci retracements measure the pullbacks within a trend, while Fibonacci extensions measure the impulse waves in the direction of the trend.
