the hAnDbook oF teChnICAl AnAlysIsthe previous significant trough. Price subsequently penetrates the previous peak
instead. The technical trader and analyst would now be interested in identify-
ing potential resistances with respect to the upside Fibonacci expansion levels
based on the observed price range. Note that the ensuing price action within
the observed price range, for the purposes of expansions and extensions, is
irrelevant. Only the height of the observed price range is taken into account
when calculating extensions and expansions. Please refer to Figures 10.11 and
10.12 for illustrations of upside and downside expansions, respectively.
Figure 10.10 Relationship between Downside Retracement, Downside Extensions,
and Upside Expansion with Respect to the Observed Price Range.
Figure 10.11 Upside Expansion beyond an Observed Price Range.