Fibonacci Retracements and Extensions are tools in technical analysis, helping traders identify potential support, resistance, and profit-taking levels. Based on Fibonacci ratios like 61.8%, 38.2%, and 23.6%, these levels guide traders in predicting price reversals and trend continuations.
When combined with other technical indicators and sound risk management, Fibonacci tools enhance strategic trading decisions in both trending and range-bound markets.
Fibonacci Extensions complement retracements by projecting potential price targets beyond the original trend. Traders often use levels like 61.8%, 100%, and 161.8% to set profit targets. This method allows for strategic scaling out of positions, making it a valuable tool for managing trades and maximizing gains during strong market trends.
