Hello, dear subscribers!
The topic of this article is Fibonacci Extensions.
What is Fibonacci Extensions?
This indicator demonstrates the hidden potential resistance levels for the uptrend and support levels for the downtrend. Here is as example of the uptrend Fib Extensions.
Let’s make a reservation right away that the Fibonacci Extensions is not the same as . The second one is usually used for the pullback levels definition after a huge dump, but not for the potential targets of the uptrend.
How to define the Fibonacci Extensions?
For the levels definition we should find the lowest (point A) and highest (point B) points of the last global swing. After that we should define the lowest point of current swing and the beginnig of the uptrend (point C). The extensions are defined with the Fibonacci numbers and the corresponding levels are 23%, 38%, 50%, 61%, 78%, 100% and 161%. This levels are calculated automatically in the TradingView.
How to use Fibonacci levels?
As you can see on the chart these levels are usually associated with the difficulties for the price to break it through. These are resistance levels and if some of these levels is broken by the price it is likely to see the next Fib level. For example, now the BTC price is testing the 161% Fib level and if it break this level confidently the next price target could corresponds to the next Fib extensions level.