Definition
Fibonacci extensions project price targets beyond the original move using ratios like 127.2%, 161.8%, 200%, and 261.8%. They help traders set profit targets when price breaks to new highs or lows. Often used in conjunction with retracements.
Example
After a stock rises from $40 to $60, the 161.8% extension target is $72.36 [40 + (60-40) × 1.618]. Traders may take profits near this level.
FAQ
What is Fibonacci Extension?
Levels beyond 100% used to project potential price targets.
Why is Fibonacci Extension important?
Fibonacci Extension helps investors evaluate technical analysis and make more informed decisions.