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Trends & Market Structure

What Is a Fibonacci Extension

A Fibonacci extension takes the length of the last move and lays it again from where the pullback ended, marking 61.8, 100 and 161.8 percent of that length above it. This paper shows you one drawn from the euro's 2025 turning points, the idea as a stick measured against the move and laid again, the lines on the daily chart, the three points the tool is built on, and how to draw it with three clicks on your platform.

Difficulty
Beginner
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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The move, laid again

A Fibonacci extension takes the length of the last move and lays it again from where the pullback ended. The euro against the dollar rose from A, 1.01771 on 13 January 2025, to B, 1.09544 on 18 March — 777 pips, a pip being the fourth decimal place, the smallest step most people count in. It pulled back to C, 1.08813 on 7 April. The extension marks 61.8 percent of the move above C at 1.13617, all of it at 1.16586, and 161.8 percent at 1.21390. The price went past the first two lines, in April and in July, and had not reached the third when the data ends.

The same stick

The picture is a stick cut to the length of the move from A to B. A retracement lays the stick back along the move and reads how far back the price has come. An extension lays the same stick forward, starting where the pullback ended at C, and reads how far past C the price has gone, as a share of the stick: 61.8 percent of it, all of it, 161.8 percent of it. Same stick, laid the other way.

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