What are Fibonacci extension targets?

    Quick Answer

    Key Fibonacci extension targets are 127.2%, 161.8%, 200%, and 261.8%, used to project profit-taking levels.

    Detailed Explanation

    Fibonacci extensions project potential price targets beyond the original move. While retracements measure pullbacks, extensions measure how far price might travel after retracing. The key extension levels are 127.2%, 161.8% (golden ratio), 200%, and 261.8%. Traders use these to set profit targets and identify potential resistance.

    Key Points

    • 1127.2% - Conservative target
    • 2161.8% - Golden ratio extension
    • 3200% - Full measured move
    • 4261.8% - Extended target
    • 5Draw from swing low to high to retracement

    Example

    Move from $100 to $150 ($50 range), retraces to $130. The 161.8% extension = $130 + ($50 × 1.618) = $210.90 target.

    Want to Apply This Knowledge?

    Get professional guidance on implementing these concepts in your trading.