Fibonacci Extensions

Extension is " recapturing"  a percentage of the previous move. The difference between retracement and extension is that the extension captures more than 100% of the previous move X:A
The specific ratios involved in the extension are 1.272 and 1.618



Let X=$20 and A=$30 in fig 2.1
Range= 30-20=$10
Lets multiply the range by Fibonacci ratios

Ratios            Point
1.272             $12.72
1.618             $16.18


Take the number points by each ratio and subtract it from A( $30)

Ratios            Point                Pt. A                           Fibonacci Retracement
1.272             $12.72                 $30                              $17.28
1.618             $16.18                 $30                              $13.82
When the stock falls, the first support is 17.28 and second support is 13.82




Let X=$30 and A=$20 in fig 2.2
Range= 30-20=$10
Lets multiply the range by Fibonacci ratios

Ratios            Point
1.272             $12.72
1.618             $16.18


Take the number points by each ratio and add it to A( $20)

Ratios            Point                Pt. A                           Fibonacci Retracement
1.272             $12.72                 $20                              $32.72
1.618             $16.18                 $20                              $36.18


First resistance level is $32.72 and and second resistance is $36.18