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%.
Investopedia Commentary
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.
Related Links
Advanced Fibonacci Applications
Fibonacci And The Golden Ratio
See also: Breakout, Fibonacci Numbers/Lines, Fibonacci Retracement, Pattern, Price Target, Resistance, Support, Technical Analysis
Also spelled: Fibbonacci, Fibonaci, Fibonachi