Technical Analysis Tools And Indicators-
Fibonacci Time Extensions Trend Analysis
Most of us are aware of the Fibonacci ratios that we use for price retracements. Today, we will discuss another wonderful tool that Fibonacci has given.
Unlike Fibonacci retracement ratios for Price retracement, we use the Fibonacci Time extension between a major swing low and a swing high or vice versa to know the approximate time when we will get another important high or low in future.
In the above chart, we can see the Fibonacci Time Extension at play. We joined the low of 6639 with the high of 7563 on the Nifty daily chart & we can see how future lower high was made at 100%, followed by a higher low at 161.8% and then a higher high at 261.8% Fibonacci time extension zone.
The Fibonacci Time Extension can be plotted on most of the charting software and can be a useful tool to safeguard our trades by approximating a major swing high or swing low being formed.