4.4 Fibonacci Extension
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Adept Level
Fibonacci Extension (Trend Based Fib Extension on Tradingview) works by connecting three pivots to produce external levels.
It is important to note that the Fibonacci Extension tool is only used to produce external levels.
While you have not yet reached the Elliott Wave module, this is also one of the primary tools for Elliott Waves.
As mentioned before in this series, Fibonacci Extension can be used as an additional confluence to identify entry and take profit levels.
Fibonacci Extension (Trend Based Fib Extension on Tradingview) works by connecting three pivots to produce external levels.
It is important to note that the Fibonacci Extension tool is only used to produce external levels.
While you have not yet reached the Elliott Wave module, this is also one of the primary tools for Elliott Waves.
As mentioned before in this series, Fibonacci Extension can be used as an additional confluence to identify entry and take profit levels.
Key Points of the Lesson
UTILITY
Only used for external moves.
The most common extensions are 1 and 1.618.
Can be used as price targets for taking profits.
Primary tool for Elliott Waves (EW). EW will be explained in a future course.
IMPLEMENTATION
Always pull from left to right using three pivots.
Uptrend: pull low to high to higher low.
Downtrend: pull high to low to lower high.
levels:
1
1.618
2
2.618
Elliott Wave levels:
0.382
0.618
Harmonic pattern levels:
1.133
1.414
TIPS & TRICKS
The 1 to 1 is a common target in corrective price action.
1.618 is a common target for impulsive price action.
If price claims the 1.618 level it is considered very impulsive ⇒ target the 2.618.
The 1 to 1 is a nice take profit area in very impulsive price action.
Sign of weakness (SOW) : If an asset does not hit the 1 to 1 extension.
Fib Extension can be used in conjunction with Negative Fibs and Fib Expansions to build strong confluence.
TAKE HOME MESSAGE
Only used for external moves.
Use Three pivots.
Most common extensions 1 and 1.618 Extensions.
Elliott waves primary tool.
Levels Fibonacci Extension
