Fibonacci extensions and projections

Prerequisite: A repeatable multi-timeframe process

On a small screen, scroll the figure sideways or open it full size.

Learning objective

Use an explicit two-point or three-point convention for extension arithmetic.

Extensions describe reference prices beyond a selected move or projected from a later correction. Two-point tools and three-point trend-based tools can place different prices under similarly named percentages. Write the formula and all anchors rather than assuming that every platform uses the same convention.

For an upward three-point projection, A→B is the initial move and C is the correction anchor. A reference at multiplier k is C + k(B − A). A downward analogue subtracts the magnitude of the initial decline from C. The correction point must be known under the chosen swing rule before projection is claimed.

Ratios such as 1.0 and 1.618 are geometric scenario references. Price may stop early, overshoot or reverse, so combine the projection with known areas and a risk plan without assigning a success percentage. Multiple extensions from overlapping swings are highly related calculations, not independent forecasts.

Common mistakes

Do not compare extension screenshots without checking anchors and formula. Moving C retrospectively can convert a failed reference into a misleading apparent hit.

Practice

Use a downward move A=150, B=130 and correction C=138. Compute three-point 100% and 161.8% projections, then explain why changing C alters both while initial move size stays fixed.

Sources & further reading

• TradingView — Trend-based fib extension drawing tool