What are Fibonacci extensions?, Guide Part 13
Zaktualizowano
What are Fibonacci extensions?
Generally, Fibonacci extensions are the levels used by traders to detect probable profit ends and estimate the continuation of a cost shift after a pullback or reversal. Fibonacci expansion levels are very useful for understanding reversals and likely bottlenecks in cost continuations. Simply put, Fibonacci expansion levels are the key zones from which the cost of a stock, two currencies or a particular commodity could reverse.
Extensions have the possibility to simply design using the Fibonacci retracement tool, and the indicator automatically draws different expansion levels from where they have the possibility to reverse costs.
Here for example we have BTC. First of all, let's detect start Bullish Trend, End Point, Pullback Point. So we apply correctly the Fib Extension.
In the blue circle we have the Start Point.
In the red circle we have the End Point.
In the green circle we have the Pullback Point.
Starting point: Beginning of a change or continuation of a trend.
End Point: Initial maximum or minimum zone of the change or continuation of trend.
Pullback point: Zone of attempt to reverse the current trend.
If we apply a Fib retracement. Since it is doing a retracement, not a Fibonacci projection. We can notice that it is touching the 61.8% Gold Point. Which could be a good signal to wait for a small drop that we consider entry.
Lines:
Candles:
Applying Fib Extension:
Lines:
If we use Candles, we can notice this:
Here we can see that we are playing ATH of 1.618. Does this sound familiar? Yes, it does. Remember that Eliot's Waves can be used on the upside or the downside. But mostly bullish. To apply them to the downside, you would invert the chart. You can get these levels using Extension and retracements or Fibonacci and retracements. Both options are valid. But this time we will use Extension and Retracements. Remember that the only requirement is that the rules are met, in the previous analysis of BTC we saw that on the upside Eliot's rules were not really met exactly, but well, let's see the possibility of applying Impulse Waves to the downside and practice Extensions.
Remember, using Fibonacci and Retracements to find Eliot waves is valid.
Likewise, using extensions and retracements to find Eliot waves is valid.
Both are valid, it depends on the taste of each user. Now, in order not to get too confused when placing retracements and projections either with Fib extension or Fib retracement, we will give Anticlick to the current Scale and place Inverted Scale. This will turn your world upside down, but it will help.
b] Applying Eliot Waves Impulse With Fib Retracemetns and Extensions.
Wave 1, Occurs after a major 0.5 Fib pullback..
If we take Wave 1 from this point the 100% Peak would be less than the retracement. So I will disregard it from this point.
From this point I consider it much better, since it exceeds 0.5% and touches levels of 0.786% which are perfect for a rebound.
Wave 2: Retracement of Wave 1. It usually touches levels of minimum 61.8% and 76.4% - 78.6% here there are different opinions, but it stays in this range.
b]Wave 3: It is usually a Fib Projection or Fib Extension to your liking. It's your call. Which usually seeks to exceed 1.618%. Or touch it.
Valid in Lines and Candles, we are well all are being fulfilled to perfection both in closing price (Lines) and shades (Candles, Hollow Candles, Bars, Heikin Ashi, etc.).
b]Wave 4: Based on this 1,618 Fib being the maximum that Wave 3 Impulse can reach (Not yet defined, it could reach higher levels, but in the case it is the maximum.
Wave 4, imposes a retracement of Wave 3 of a 0.23 Fib low or 0.382 Fib high. The 0.23 has not yet been met and the 0.382 has been invalidated in Candles.
Candles invalid:
1,618 Fib Extension Candles:
But when measuring the retracement... It invalidates the Wave 4 rule. Because it breaks the 0.382 Fib. So we discard Candles and now we will use only Lines which still meets all the rules.
In Lines: Fib's 1,618 would be exceeded, and on Candles, it would be touched. In Candles, Wave 4 would be invalidated. In Lines no, so this is where we discard the use of Candles and begin to prioritize Lines to continue applying Impulse Waves. Although many long shadows that appear tend to disappear after some time by magic, so many use Lines to validate patterns.
Lines:
1,618 Fib Wave 3 Wave 2 Projection, Exceeded.
Wave 4. Wave 3 retracement at 0.382 Fib High and 0.23 Fib Low, 0.23 Fib not yet touched, 0.382 Fib not broken. Valid.
As we can see in Lines, everything is going well. Having as possible Wave 4 go to test 44k USDT. As Maximum.
Wave 5:
Suppose we ignore the rule and place the use of a shadow. And we take 0.382 levels of Fib Retracement Fib of Wave 4 and place a Projection with Fib Extension of Wave 4, Let's remember that wave 5 must have a minimum of 1.38-1.618, here there are different opinions, in general I prefer to take into account 1.5-1.618 as a priority. If we take into account each level our Wave 5, I could go to test.
13100-7800 USDT. In Value. The final result of all the Waves is as follows:
And here is the reason, why I do not consider an Impulse Waves, I prefer to have the idea that it is an ABC. Mentioned here:
Because if we apply the Impulse Waves the Wave 5 would be quite exaggerated, which is normal, as long as Wave 3 is not the smallest it is still valid. But it is not really my preference.
If we base it on an Impulse and then an ABC Corrective wave, the idea would be a little more coherent.
Using Fib-Extension of Fib. Of course. Now let's look at this ABC in another way. Remember the rules.
Wave A: Wave 4 Retracing, Above it. Mostly.
Wave B: It is usually the corrective of Wave A, being less than 75%.
Wave C: Same length as wave A, 150%-161.8% of wave B or 261.8% of wave b in extreme case.
This would be the best way, for me, personally a bearish Impulse Waves is very extreme. An ABC is more coherent, although as I warned, Eliot's theory does not really apply to its perfection in this case, Wyckoff has more foundation in this case.
And well, what did you think about Fib Extension?, something complicated?, Fib Extension is a tool to search for targets in Projection, personally the Fib retracement that by simply editing the configuration you could get something similar and it is a little better. To my personal taste. Maybe using Fib extension in Eliot's theory is the most accurate, but it is also valid to use Fibonacci by itself to search for this. greetings!
Configuration:
0 - Initial Price.
0.23 - Test
0.382 - Buy Zone
0.5 - Psychological
0.618 - Test Trend
0.786 - Test Trend
1 - Go.
1,382 - Trend Take Profit
1,618 - Trend Take Profit
1,786 - Trend Take Profit
2,618 - Extreme Take Profit.
Generally, Fibonacci extensions are the levels used by traders to detect probable profit ends and estimate the continuation of a cost shift after a pullback or reversal. Fibonacci expansion levels are very useful for understanding reversals and likely bottlenecks in cost continuations. Simply put, Fibonacci expansion levels are the key zones from which the cost of a stock, two currencies or a particular commodity could reverse.
Extensions have the possibility to simply design using the Fibonacci retracement tool, and the indicator automatically draws different expansion levels from where they have the possibility to reverse costs.
Here for example we have BTC. First of all, let's detect start Bullish Trend, End Point, Pullback Point. So we apply correctly the Fib Extension.
In the blue circle we have the Start Point.
In the red circle we have the End Point.
In the green circle we have the Pullback Point.
Starting point: Beginning of a change or continuation of a trend.
End Point: Initial maximum or minimum zone of the change or continuation of trend.
Pullback point: Zone of attempt to reverse the current trend.
If we apply a Fib retracement. Since it is doing a retracement, not a Fibonacci projection. We can notice that it is touching the 61.8% Gold Point. Which could be a good signal to wait for a small drop that we consider entry.
Lines:
Candles:
Applying Fib Extension:
Lines:
If we use Candles, we can notice this:
Here we can see that we are playing ATH of 1.618. Does this sound familiar? Yes, it does. Remember that Eliot's Waves can be used on the upside or the downside. But mostly bullish. To apply them to the downside, you would invert the chart. You can get these levels using Extension and retracements or Fibonacci and retracements. Both options are valid. But this time we will use Extension and Retracements. Remember that the only requirement is that the rules are met, in the previous analysis of BTC we saw that on the upside Eliot's rules were not really met exactly, but well, let's see the possibility of applying Impulse Waves to the downside and practice Extensions.
Remember, using Fibonacci and Retracements to find Eliot waves is valid.
Likewise, using extensions and retracements to find Eliot waves is valid.
Both are valid, it depends on the taste of each user. Now, in order not to get too confused when placing retracements and projections either with Fib extension or Fib retracement, we will give Anticlick to the current Scale and place Inverted Scale. This will turn your world upside down, but it will help.
b] Applying Eliot Waves Impulse With Fib Retracemetns and Extensions.
Wave 1, Occurs after a major 0.5 Fib pullback..
If we take Wave 1 from this point the 100% Peak would be less than the retracement. So I will disregard it from this point.
From this point I consider it much better, since it exceeds 0.5% and touches levels of 0.786% which are perfect for a rebound.
Wave 2: Retracement of Wave 1. It usually touches levels of minimum 61.8% and 76.4% - 78.6% here there are different opinions, but it stays in this range.
b]Wave 3: It is usually a Fib Projection or Fib Extension to your liking. It's your call. Which usually seeks to exceed 1.618%. Or touch it.
Valid in Lines and Candles, we are well all are being fulfilled to perfection both in closing price (Lines) and shades (Candles, Hollow Candles, Bars, Heikin Ashi, etc.).
b]Wave 4: Based on this 1,618 Fib being the maximum that Wave 3 Impulse can reach (Not yet defined, it could reach higher levels, but in the case it is the maximum.
Wave 4, imposes a retracement of Wave 3 of a 0.23 Fib low or 0.382 Fib high. The 0.23 has not yet been met and the 0.382 has been invalidated in Candles.
Candles invalid:
1,618 Fib Extension Candles:
But when measuring the retracement... It invalidates the Wave 4 rule. Because it breaks the 0.382 Fib. So we discard Candles and now we will use only Lines which still meets all the rules.
In Lines: Fib's 1,618 would be exceeded, and on Candles, it would be touched. In Candles, Wave 4 would be invalidated. In Lines no, so this is where we discard the use of Candles and begin to prioritize Lines to continue applying Impulse Waves. Although many long shadows that appear tend to disappear after some time by magic, so many use Lines to validate patterns.
Lines:
1,618 Fib Wave 3 Wave 2 Projection, Exceeded.
Wave 4. Wave 3 retracement at 0.382 Fib High and 0.23 Fib Low, 0.23 Fib not yet touched, 0.382 Fib not broken. Valid.
As we can see in Lines, everything is going well. Having as possible Wave 4 go to test 44k USDT. As Maximum.
Wave 5:
Suppose we ignore the rule and place the use of a shadow. And we take 0.382 levels of Fib Retracement Fib of Wave 4 and place a Projection with Fib Extension of Wave 4, Let's remember that wave 5 must have a minimum of 1.38-1.618, here there are different opinions, in general I prefer to take into account 1.5-1.618 as a priority. If we take into account each level our Wave 5, I could go to test.
13100-7800 USDT. In Value. The final result of all the Waves is as follows:
And here is the reason, why I do not consider an Impulse Waves, I prefer to have the idea that it is an ABC. Mentioned here:
Because if we apply the Impulse Waves the Wave 5 would be quite exaggerated, which is normal, as long as Wave 3 is not the smallest it is still valid. But it is not really my preference.
If we base it on an Impulse and then an ABC Corrective wave, the idea would be a little more coherent.
Using Fib-Extension of Fib. Of course. Now let's look at this ABC in another way. Remember the rules.
Wave A: Wave 4 Retracing, Above it. Mostly.
Wave B: It is usually the corrective of Wave A, being less than 75%.
Wave C: Same length as wave A, 150%-161.8% of wave B or 261.8% of wave b in extreme case.
This would be the best way, for me, personally a bearish Impulse Waves is very extreme. An ABC is more coherent, although as I warned, Eliot's theory does not really apply to its perfection in this case, Wyckoff has more foundation in this case.
And well, what did you think about Fib Extension?, something complicated?, Fib Extension is a tool to search for targets in Projection, personally the Fib retracement that by simply editing the configuration you could get something similar and it is a little better. To my personal taste. Maybe using Fib extension in Eliot's theory is the most accurate, but it is also valid to use Fibonacci by itself to search for this. greetings!
Configuration:
0 - Initial Price.
0.23 - Test
0.382 - Buy Zone
0.5 - Psychological
0.618 - Test Trend
0.786 - Test Trend
1 - Go.
1,382 - Trend Take Profit
1,618 - Trend Take Profit
1,786 - Trend Take Profit
2,618 - Extreme Take Profit.
Uwaga
These charts have been placed on a logarithmic scale - neutral looking to coincide with Fib's 0.786. On a neutral scale it looks totally different.
Wyłączenie odpowiedzialności
Informacje i publikacje przygotowane przez TradingView lub jego użytkowników, prezentowane na tej stronie, nie stanowią rekomendacji ani porad handlowych, inwestycyjnych i finansowych i nie powinny być w ten sposób traktowane ani wykorzystywane. Więcej informacji na ten temat znajdziesz w naszym Regulaminie.