1. What is Fibonacci Extension?

Fibonacci extensions are used in trading to predict potential support/resistance levels or profit targets beyond the standard 100% move. Common extension levels include 1.272, 1.414, 1.618, and 2.618.

2. How Does the Calculator Work?

The calculator uses the Fibonacci extension formula:

Where:

• \( high \) — The highest price point (USD)
• \( low \) — The lowest price point (USD)
• \( fib\text{ }extension \) — Fibonacci ratio (typically 1.618)

Explanation: The formula calculates potential price targets by extending the initial price move by common Fibonacci ratios.

3. Importance in Trading

Details: Fibonacci extensions help traders identify potential profit targets and areas where price might reverse. They are particularly useful in trending markets.

4. Using the Calculator

Tips: Enter the high and low prices in USD, then select your desired Fibonacci extension ratio (1.618 is the default golden ratio). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What are the most common Fibonacci extension levels?
A: The most commonly used levels are 1.272, 1.414, 1.618, 2.0, 2.272, and 2.618.

Q2: How accurate are Fibonacci extensions?
A: While not perfect, they often coincide with psychological price levels and can be self-fulfilling prophecies as many traders watch them.

Q3: Should I use closing prices or wicks for high/low?
A: Most traders use the extreme wicks (absolute high/low) rather than closing prices for Fibonacci calculations.

Q4: Can Fibonacci extensions be used for all timeframes?
A: Yes, they can be applied to any timeframe from 1-minute charts to weekly/monthly charts.

Q5: How should I combine this with other indicators?
A: Fibonacci works best when combined with other technical analysis tools like trend lines, moving averages, and volume analysis.