what are fibonacci extensions 
fibonacci extensions are a tool that traders can use to establish profit targets or estimate how far a price may travel after a pullback is finished extension levels are also possible areas where the price may reverse drawn as connections to points on a chart these levels are based on fibonacci ratios as percentages common fibonacci extension levels are 61 8 100 161 8 200 and 261 8 1creating fibonacci extensionsfibonacci ratios are common in everyday life and nature seen in galaxy formations architecture shells hurricanes and some plants therefore some traders believe these common ratios may also have significance in the financial markets 2fibonacci extensions don t have a formula when the indicator is applied to a chart the trader chooses three points the first point chosen is the start of a move the second point is the end of a move and the third point is the end of the retracement against that move the extensions then help project where the price could go next once the three points are chosen the lines are drawn at percentages of that move extensions are drawn on a chart marking price levels of possible importance these levels are based on fibonacci ratios as percentages and the size of the price move the indicator is being applied to investopedia sabrina jiang