Fibonacci Extensions


DEFINITION of 'Fibonacci Extensions'

Levels used in Fibonacci retracement to forecast areas of support or resistance. Extensions consist of all levels drawn beyond the standard 100% level and are used by many traders to determine areas where they will wish to take profits. The most popular extension levels are 161.8%, 261.8% and 423.6%.

Fibonacci Extensions

BREAKING DOWN 'Fibonacci Extensions'

In practice, most traders use Fibonacci extensions in combination with other technical indicators/patterns to help them determine appropriate target prices. As this chart shows, the 161.8% level is often used to set the price target on a breakout of an ascending triangle. This specific target is calculated by multiplying the vertical distance of the triangle by the key Fibonacci ratio of 61.8% and then adding the result to the upper resistance of the triangle.

  1. Breakout

    A price movement through an identified level of support or resistance, ...
  2. Support (Support Level)

    The price level which, historically, a stock has had difficulty ...
  3. Price Target

    1. A projected price level as stated by an investment analyst ...
  4. Resistance (Resistance Level)

    A chart point or range that caps an increase in the level of ...
  5. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  6. Pattern

    In technical analysis, the distinctive formation created by the ...
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