Three most used Fibonacci extension levels are 0.618, 1.000 and 1.618. Also 1.382 extension can be applied as well.
In the example above we are in the uptrend.
Lowest swing — point A — is 120.75;
highest swing — point B — 121.44.
To calculate retracement levels and enter Long at some point C we do next:
Calculations for Uptrend and Buy order:
B — A = ?121.44 — 120.75 = 0.69
0.382 (38.2%) retracement = 121.44 — 0.69 x 0.382 = 121.180.500 (50.0%) retracement = 121.44 — 0.69 x 0.500 = 121.090.618 (61.8%) retracement = 121.44 — 0.69 x 0.618 = 121.01
Fibonacci retracement levels formula for an uptrend:
C = B — (B — A) x N%
Now we need to calculate extension levels:
0.618 (61.8% ) extension = 121.44 + 0.69 x 0.618 = 121.871.000 (100.0%) extension = 121.44 + 0.69 x 1.000 = 122.131.382 (138.2%) extension = 121.44 + 0.69 x 1.382 = 122.391.618 (161.8%) extension = 121.44 + 0.69 x 1.618 = 122.56
Fibonacci extension levels formula for an uptrend:
D = B + (B — A) x N%
Our next example is downtrend.
Highest swing — point A — is 158.20; lowest swing — point B — is 156.44.
Calculations for downtrend and Sell order:
A — B = ?158.20 — 156.44 = 1.76
Because of the downtrend we need to add to the lowest point B to find retracement.
0.382 (38.2%) retracement = 156.44 + 1.76 x 0.382 = 157.530.500 (50.0%) retracement = 156.44 + 1.76 x 0.500 = 157.320.618 (61.8%) retracement = 156.44 + 1.76 x 0.618 = 157.11
Fibonacci retracement levels formula for downtrend:
C = B + (A — B) x N%
Now let's find Fibonacci extension levels (downtrend):
0.618 (61.8%) extension = 156.44 — 1.76 x 0.618 = 155.351.000 (100%) extension = 156.44 — 1.76 x 1.000 = 154.681.382 (138.2%) extension = 156.44 — 1.76 x 1.382 = 154.011.618 (161.8%) extension = 156.44 — 1.76 x 1.618 = 153.59
Fibonacci extension levels formula for downtrend:
D = B — (A — B) x N%
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