Fibonacci extensions

[highasakite]

thanks for replying so quickly
i have looked at various vids about this although not with NTs specific tool
what am i supposed to do with the 3rd anchor?
i always stick it on top of the 2nd but that just makes the extension tool the same as the retracements tool with negatives added
its a mental block i need explained idiot style

I think this is what you are looking for:

http://www.swing-trade-stocks.com/fibonacci-extensions.html

In the first example, AIR pulls back from $25.92 (1) to $23.11 (2). It then rallies above that swing point high at $25.92 (2). So this stock has recaptured more than 100% of the move from 1 to 2. It then tops out at $26.68 (3).

Could we have known that this stock might run into resistance at $26.68 (3)? Yes - If we calculated a Fibonacci extension ahead of time.
Take the difference in price between 1 and 2. In this case: $25.92 - $23.11 = $2.81
Now take that difference, $2.81 and multiply it by 1.272. $2.81 x 1.272 = $3.57
Now add $3.57 to $23.11 (2) and you get...
$26.68 - the exact high at 3. That is the Fibonacci extension.

In the second example...

$28.75 - $25.00 = $3.75 x 1.272 = $4.77 + $25.00 = $29.77. We are off by three cents here.

So, if you buy pullbacks and you are wanting to take partial profits on a stock, you can calculate this ahead of time.

Note: The two common Fibonacci ratios used for calculating extensions are 1.618 and 1.272. There are others but these seem to work the best.

It´s different from Ninjas fib extensions, using only two points instead of three. The last retrace only, to predict S/R levels of the presumed continuation of the trend or future reversal of it. I think this is what Dynamic Traders are using, as well as Carolyn Boroden in her book Fibonacci Trading.

Sometimes the 1.272 and 1.618 extension levels seems close to Ninjas 38,2% and 50% extensions depending on where you put point A of A-B-C. The two point version share only point B and C.

If I add 123,6% and 161,8% to Ninjas simple 2-point fib retracements and measure the same last retracement BC it´s getting even closer to the 2-point extension version. But I´m not sure if its the same thing.

Compared to koganam I would say: The Fibonacci retracement will make measures of BC, using AB as a reference, while the Fibonacci extension will make measures of CD, using BC as a reference. And the Ninjatrader version measure CD by using ABC as a reference.

[koganam]

I think this is what you are looking for:

http://www.swing-trade-stocks.com/fibonacci-extensions.html

It´s different from Ninjas fib extensions, using only two points instead of three. The last retrace only, to predict S/R levels of the presumed continuation of the trend or future reversal of it. I think this is what Dynamic Traders are using, as well as Carolyn Boroden in her book Fibonacci Trading.

Sometimes the 1.272 and 1.618 extension levels seems close to Ninjas 38,2% and 50% extensions depending on where you put point A of A-B-C. The two point version share only point B and C.

If I add 123,6% and 161,8% to Ninjas simple 2-point fib retracements and measure the same last retracement BC it´s getting even closer to the 2-point extension version. But I´m not sure if its the same thing.

Compared to koganam I would say: The Fibonacci retracement will make measures of BC, using AB as a reference, while the Fibonacci extension will make measures of CD, using BC as a reference. And the Ninjatrader version measure CD by using ABC as a reference.

Read the whole thread. Especially #7. It explains the point that you just made.