Fibonacci sequences are common patterns in nature that some traders believe to also be significant in financial markets. The common Fibonacci sequence is 0, 1, 1, 2, 3, 5, 8, 13, 21, and so on. In trading, the sequence is commonly understood to be 61.8%, 100%, 161.8%, 200%, and 261.8%. These extensions show how far the next price wave could move after a pullback. They signal potentially important areas, but shouldn’t be used as exclusive indicators.
We don't know everything about the markets. We're just devoted to learners. Taken from those smarter than ourselves, here's how we define Fibonacci Extension.