Fibonacci Extension

The Fibonacci extension is a tool that establishes price targets, finds the support area or resistance area, and helps traders estimate how far a price may travel after a retracement/pullback is completed. It is a measure to increase the utility of Fibonacci retracements over time. It can be drawn by extending the length of the initial Fibonacci retracement vertical line and drawing additional horizontal lines through it at a higher or lower price level, corresponding to greater Fibonacci ratio (percentage) and the price change applied by the indicator. Once the Fibonacci level exceeds the initial retracement resistance, the level becomes support, and the subsequent Fibonacci level becomes resistance.

Fibonacci expansion is a long-term tool to determine market support and resistance levels when prices have broken out of the original support or resistance level and started moving along a new trend.