Forex glossary
Fibonacci Extension
Fibonacci extensions project multiples of a price move onto price levels. A three-point tool measures AB and projects a multiple from retracement endpoint C; two-point tools use another anchor. Selected levels such as 1.618 are areas to monitor rather than forecasts that a target will be reached.
Illustrative example
How does it work in practice?
Assume A at 100, B at 110 and retracement endpoint C at 106 on a linear scale. A three-point 1.618 projection is 122.18; the calculation defines a level rather than predicting price.
A case to work through
Projection after a decline
Hypothetically, A=140, B=120 and C=128; use a linear three-point 1.618 projection.
- AB spans 20 and the original direction is downward.
- The projected level is 128−1.618×20=95.64.
What follows? Record 95.64 as a projection level rather than a future price.
Example boundary: Changing C, scale or tool type changes the calculation.
A useful distinction
Fibonacci Extension / Fibonacci Retracement
Extension projects a move's multiple from an anchor; retracement measures a correction within the selected move.
Check your understanding
Calculate an extension in the direction of a downward AB leg.
Show the answer and explanation
37.64
70−1.618×20=37.64.
Anchors, ratios and rules
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Related terms
Sources and documentation
- TradingView – trend-based Fibonacci extension
Three anchors: original move start/end and the retracement endpoint.
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