1. What is Fibonacci Extension?

Fibonacci extensions are used in technical analysis to predict potential price targets or areas of support/resistance beyond the standard 100% move. They are based on Fibonacci ratios that occur throughout nature and financial markets.

2. How Does the Calculator Work?

The calculator uses the Fibonacci extension formula:

Where:

• \( Base \) — The base price point (USD)
• \( High \) — The highest price in the move (USD)
• \( Low \) — The lowest price in the move (USD)
• \( Fibonacci\ Ratio \) — Common ratios: 0.236, 0.382, 0.5, 0.618, 1.0, 1.618

Explanation: The formula projects potential price targets by applying Fibonacci ratios to the price range of a market move.

3. Importance of Fibonacci Levels

Details: Fibonacci extension levels help traders identify potential profit targets, areas where price might reverse, or where to place stop-loss orders. They are widely watched by market participants.

4. Using the Calculator

Tips: Enter the base price (typically a swing low or high), the high and low of the price range you're analyzing, and select a Fibonacci ratio. All values must be valid (prices > 0, high > low).

5. Frequently Asked Questions (FAQ)

Q1: What are the most important Fibonacci ratios?
A: The 0.618 (golden ratio) and 1.618 extensions are most significant, followed by 0.382 and 0.5.

Q2: How do I choose the base point?
A: Typically use the start of the price move you're analyzing - a significant swing low for uptrends or swing high for downtrends.

Q3: Are Fibonacci extensions reliable?
A: While not perfect, they often mark areas where price may react due to collective trader psychology and algorithmic trading.

Q4: Should I use closing prices or wicks?
A: Most traders use the extremes (highs/lows including wicks) as these represent the full price range.

Q5: What timeframes work best?
A: Fibonacci extensions work across all timeframes but are most reliable on higher timeframes (daily/weekly charts).