Fibonacci Extension
Levels projected beyond a prior move at set multiples of its size, used to mark possible areas where an advance may pause.
Formula
Extension Level = Retracement Low + (High - Low) x Ratio, where common ratios are 127.2%, 161.8%, 200% and 261.8%
Unit
%
In depth
Extensions apply the same ratios beyond the original move rather than inside it, and they require three points — a swing low, a swing high and the retracement low — which makes them even more sensitive to subjective selection than retracements. Because the levels are pure projection with no reference to anything that has traded, their status is weaker still than retracement levels drawn on actual prior prices. Traders use them mainly to set profit targets, which at least imposes a pre-committed exit rule. The entry describes the arithmetic and asserts nothing about price.
Worked example
A move from ₹462 to ₹534 is ₹72, with a retracement to ₹498. The 161.8% extension is 498 + 1.618 x 72 = 498 + 116.50 = ₹614.50. It is a calculated level, not a price anyone has traded at.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Fibonacci Extension” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.