Fibonacci Extension
Also called: fib extension
Projection levels (127.2%, 161.8%, 200%, 261.8%) used to estimate take-profit targets beyond the original swing.
Definition
While retracements look at pullbacks within a move, extensions project where the next leg might end. Common targets: 127.2%, 161.8%, 200%, and 261.8% of the original impulse.
Combined with horizontal resistance or trendline projections, extensions help define realistic profit targets for trend-continuation trades.
Example
EUR/USD swings up 100 pips, pulls back 50%, then resumes. The 161.8% extension projects a target 162 pips above the pullback low.