Latest posts

    Ethereum – Secret bear flag! (70% crash target)

    March 31, 2023

    Bitcoin is retesting a trendline from 2013! (right now)

    March 29, 2023

    Bitcoin – No one talks about this trendline, last wave up!

    March 27, 2023
    Telegram RSS
    • My TradingView
    • Best way to trade futures
    • Best way to trade spot
    • The holy grail of trading
    • The game changer
    Telegram RSS
    Tolberti
    • Home
    • Education
      1. Motivation & Strategy
      2. Technical Basics
      3. Candlesticks
      4. Chart patterns
      5. Indicators
      6. FIbonacci
      7. Elliott wave
      8. Harmonic patterns
      9. View All

      What is drawdown in Trading

      December 2, 2022

      Trading Psychology and its Importance – Tips For a Winning Mindset

      November 2, 2022

      As a trader you need to stay disciplined!

      November 2, 2022

      How to Create a Successful Trading Plan – Step-By-Step Guide

      November 2, 2022

      Price action trading strategies that you need to know

      November 2, 2022

      Support and Resistance – A basic concept of technical analysis

      November 2, 2022

      Technical analysis explained – What is it and how does it work?

      November 2, 2022

      The most common mistakes technical analysts make

      November 2, 2022

      Candlestick Patterns – Complete Guide to Bearish and Bullish Candlesticks

      November 2, 2022

      Rising three methods

      August 11, 2022

      Falling three methods

      August 11, 2022

      Spinning top

      August 11, 2022

      Rising & Falling Wedge

      January 20, 2023

      Bullish Pennant

      January 20, 2023

      Bull Flag

      January 20, 2023

      Head and Shoulders

      January 20, 2023

      OBV – On-Balance Volume

      December 2, 2022

      Market Profile – A Complete Guide

      November 2, 2022

      Ichimoku cloud

      August 18, 2022

      Moving average (MA)

      August 18, 2022

      Fibonacci and Market Analysis

      August 13, 2022

      4 mistakes that Traders should avoid while Trading with Fibonacci

      August 13, 2022

      Why Fibonacci Series is important for Technical Analysis

      August 13, 2022

      A complete overview on trend and theory of retracement

      August 13, 2022

      Elliott Wave Cheat Sheet: All You Need

      August 14, 2022

      Elliott Wave Theory: Complex guide

      August 14, 2022

      Elliott Wave: All About How To Count

      August 14, 2022

      Leading And Ending Diagonal: How To Trade Them

      August 14, 2022

      Alternate bat pattern

      October 1, 2022

      The List of All Known Harmonic Patterns & Ratios

      October 1, 2022

      Cypher pattern

      September 1, 2022

      ABCD pattern

      August 13, 2022

      Rising & Falling Wedge

      January 20, 2023

      Bullish Pennant

      January 20, 2023

      Bull Flag

      January 20, 2023

      Head and Shoulders

      January 20, 2023
    • Technical analysis

      Ethereum – Secret bear flag! (70% crash target)

      March 31, 2023

      Bitcoin is retesting a trendline from 2013! (right now)

      March 29, 2023

      Bitcoin – No one talks about this trendline, last wave up!

      March 27, 2023

      Shiba Inu – 23% crash, best opportunity! (long-term outlook)

      March 25, 2023

      Bitcoin – The bottom is not in! 15k or 10k (careful)

      March 23, 2023
    • Info
      • Crypto news
      • Crypto converter
      • Crypto exchanges
      • My TradingView
      • Best way to trade futures
      • Best way to trade spot
    • Contact
    • My books
    • Join premium channel
    Tolberti
    Home»Education»FIbonacci»Fibonacci extension
    FIbonacci

    Fibonacci extension

    By TolbertiAugust 13, 2022No Comments
    Facebook Twitter Telegram WhatsApp Reddit Pinterest Email
    Share
    Facebook Twitter Telegram WhatsApp Reddit Pinterest Email

    Determining support and resistance is quite a common problem faced by most traders. Some of the common methods to determine support and resistance include trend lines, moving averages, super trend, Fibonacci retracement etc. Today, you will learn how to determine probable support and resistance levels using Fibonacci Extension

    What is Fibonacci Series

    Fibonacci series incorporates a series of analysis tools on the basis of Fibonacci ratios and sequence showing geometrical law of human behavior and nature which is also applied to financial markets.

    The Fibonacci study can be applied to identify probable support and resistance levels by studying Fibonacci numbers in various timeframes.

    Fibonacci series is a series of numbers beginning from 0 and arranged in such a manner that any particular number of the series is simply the summation of the previous two numbers which is shown below-

    0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377 and so on.

    Lets understand the above logic with an example-

    377 = 233 + 144
    233 = 144 + 89
    144 = 89 + 55
    89 = 55 +34 55 = 34 + 21
    34 = 21 + 13

    And it goes on

    An interesting property of this Fibonacci series is that if you simply divide any number in the series by the previous number, the ratio always comes to 1.618; which is considered as the Golden Ratio also referred to as ‘Phi’.

    Let’s have a closer look at this-

    377/233 = 1.618
    233/144 = 1.618
    144/89 = 1.618
    89/55 = 1.618
    55/34 = 1.618
    34/21 = 1.618

    And so on.

    Let’s look at some other properties of this ratio and you will find a unique consistency when a particular number in the Fibonacci series is divided by a number two place prior to the given number. For instance:

    377/144 = 2.618
    233/89 = 2.618
    144/55 = 2.618
    89/34 = 2.618
    55/21 = 2.618

    And it goes on

    Similar consistency can be seen when any number in the Fibonacci series is divided by a number three prior to the given number. For example:

    377/89 = 4.236
    233/55 = 4.236
    144/34 = 4.236
    89/21 = 4.236
    55/13 = 4.236

    What is Fibonacci Extension?

    Fibonacci Extension is drawn by joining three points, unlike Fibonacci Retracement which has just two points by joining the lowest and the highest points of a pre-defined trend and vice versa.

    Let’s understand how we can draw Fibonacci Extension in case of an uptrend. You need to join the lowest and the highest point and then after a retracement or a correction, the price continues in the direction of the original trend, the low of the retracement or a pullback would be our third point.

    For example, suppose a stock moved from Rs 100 to Rs 200 and say after a retracement till 160, the stock moves in the direction of the original trend. So the first point to draw Fibonacci extension would be 100, the second point will be 200 and the third point will be 160. This will give you probable resistance where the stock may face resistance in the near future.

    The most common Fibonacci extension levels are 161.8%, 261.8% and 423.6%. Though the ratio may be a little distorted at the beginning of the sequence as the number gets bigger, the above-proved ratio appears. Though these are quite far-off numbers, so the other important resistance levels using Fibonacci extension come at 50%, 61.8%, 78.6%, and 100%, the derivation of these numbers is discussed in last week’s article on the Fibonacci retracement.

    When the stock is trading at a lifetime high area where there is no prior resistance, you may draw probable resistance levels using the Fibonacci extension.

    Fibonacci Extension Examples:

    Let’s look at some of the practical examples to gain more clarity about the concept of Fibonacci extension.

    The above chart is an example of Tata Chemicals in the weekly chart and a total of three Fibonacci extensions have been drawn in the above chart to show the number of resistance identified using the above logic. Let’s look at the Fibonacci extensions one by one.

    In the case of Fibonacci extension ABC, the stock faced resistance from 78.6% extension (503) on 20th July 2015 and witnessed a sharp selloff after it failed to close below 500 level and made a low of 309.6.

    The next 100% extension of ABC acted as strong resistance at around 580 levels on 17th July 2016 and cracked about 23% from the highs.

    Now in the case of Fibonacci extension (i ii iii), the rally which started in the month of November 2016; the stock faced resistance from 78.6% extension (660) and corrected about 100 points from the highs.

    The recent correction which started from the beginning of the year 2018 and continued more than a year’s time, faced resistance right at the convergence of 161.8% extension of both ABC and 123 Fibonacci extensions and cracked about 30% from the highs.

    A slight touch of Fibonacci retracement will be a revision of the article discussed a few weeks ago. The correction which started in 2018 got reversed right 50% Fibonacci retracement after making a double bottom almost at 550.

    Here are some other examples of Fibonacci extension in recent days.

    The below is an example of Muthoot Finance and as you can see in the chart, the stock faced slight resistance from 61.8% and 78.6% retracement and finally faced strong resistance from 100% extension at 632 level in the first week of April 2019 and cracked almost 14% from the highs.

    The below is an example of PVR ltd and as you can see in the hourly chart that the stock faced resistance from100% Fibonacci extension in the first week of May 2019 and cracked more than 7% from the high.

    The next example is of Adani Gas which recently faced resistance from 100% extension and just started to witness correction. The further move will be unfolded in the coming period.

    The next one is a daily chart of RBL bank and as you can see in the below chart that the stock faced resistance from 61.8% Fibonacci extension and cracked more than 7.5% in such a short span.

    Bottomline

    Though Fibonacci is one of the useful methods to analyze your chart it doesn’t provide an exact entry point rather an estimated area of entry. Moreover, there is no guarantee that the price will reverse from any specified Fibonacci extension level and hence you should combine it with other technical parameters as a confirmation.

     

    Share. Facebook Twitter Telegram WhatsApp Reddit Pinterest Email
    Previous ArticleFibonacci retracement
    Next Article A complete overview on trend and theory of retracement
    Tolberti
    • Website

    Professional trader and analyst. My specialization is in Elliott Wave Theory, Fibonacci tools, chart patterns, candlesticks, and price action. To analyze market structure, I use market profile and volume profile in my trading system. To analyze trends, I use trendlines, VWAP, and simple moving averages.

    Join premium channel
    Join Premium
    Random education
    Indicators

    RSI – Relative strength index

    TolbertiBy TolbertiAugust 16, 20220

    The relative strength index (RSI) is one of the most popular oscillators in all of trading. You…

    Elliott wave

    Impulse wave

    TolbertiBy TolbertiAugust 11, 20220

    It’s a price movement, which subdivides into five waves. Three of them are motive waves…

    Technical Basics

    Price action trading strategies that you need to know

    TolbertiBy TolbertiNovember 2, 20220

    In this article, we will take a look at the concept of price action trading.…

    Motivation & Strategy

    Trading Psychology and its Importance – Tips For a Winning Mindset

    TolbertiBy TolbertiNovember 2, 20220

    Trading psychology is just as important to an investor as their knowledge and ability to…

    Candlesticks

    Three black crows

    TolbertiBy TolbertiAugust 11, 20220

    The three black crows candlestick pattern comprises of three consecutive long red candles with short…

    Random analysis
    Technical analysis

    Bitcoin – You haven’t seen this before! New triangle + wedge

    TolbertiBy TolbertiSeptember 9, 20220

    Everyone is extremely bullish right now and is saying the bottom is in. But I am still…

    Technical analysis

    Ethereum – Secret bear flag! (70% crash target)

    TolbertiBy TolbertiMarch 31, 20230

    Ethereum shows a lot of weakness on the major timeframe. You can see that the…

    Technical analysis

    Bitcoin – You must see this!

    TolbertiBy TolbertiOctober 30, 20220

    Bitcoin is the beast! Did you see that green dildo on DOGE? This is what…

    Technical analysis

    Bitcoin – Next week will be extremely bullish!

    TolbertiBy TolbertiNovember 6, 20220

    It looks like next week will be extremely bullish for Bitcon and also for the altcoins! Price…

    Technical analysis

    TWT Trust Wallet – The pump is over, buy at these levels!

    TolbertiBy TolbertiNovember 29, 20220

    TWT is a great token, but it looks like the price is too high at…

    Free technical analysis and education from a professional trader. Go to the "education" section and start learning immediately.

    💡Join my premium channel on Telegram (my trades, signals) - get access.

    ✅ 1 month: 49 USD
    ✅ 4 months: 99 USD
    ✅ 12 months: 149 USD
    ✅ Life Time: 249 USD

    Latest posts

    Ethereum – Secret bear flag! (70% crash target)

    March 31, 2023

    Bitcoin is retesting a trendline from 2013! (right now)

    March 29, 2023

    Bitcoin – No one talks about this trendline, last wave up!

    March 27, 2023
    Get Informed

    Subscribe to Updates

    Get the latest news about crypto, technical analysis and trading.

    Telegram RSS
    • Home
    • Education
    • Technical analysis
    • Info
    • Contact
    • Terms of use
    • My book
    • Join premium channel
    © 2023 Tolberti.com. All rights reserved.

    Type above and press Enter to search. Press Esc to cancel.

    This website uses cookies to give you the most relevant experience.
    Cookie SettingsAccept
    Manage consent

    Privacy Overview

    This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
    Necessary
    Always Enabled
    Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
    CookieDurationDescription
    cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
    cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
    cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
    cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
    cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
    viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
    Functional
    Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
    Performance
    Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
    Analytics
    Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
    Advertisement
    Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
    Others
    Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
    SAVE & ACCEPT