Fibonacci Number and Ratio Analysis
The reader should note that there is some confusion in the industry and litera-
ture with regard to the use of the terms extension, expansion, and projection. On
some charting platforms, projections are referred to as expansions. Some authors
also use extension to mean expansion. Nevertheless, as long as the user is clear as
to the objective of the observation, there should not be any confusion.10.3.4 price projections (also referred to as
abC projections)
An upside price projection is a projection of an observed price range from a
higher significant trough. A 100 percent price projection is simply a one to one
(1:1) projection of the observed price range from some new higher significant
trough. Similarly, a 200 percent price projection is a two to one (2:1) projection
of the observed price range from some new higher significant trough. Fibonacci
upside price projections use the Φ‐related percentages for forecasting potential
resistances in an uptrend. Similarly, Fibonacci downside price projections use
the Φ‐related percentages for forecasting potential support in a downtrend. It
is interesting to note that upside price projections essentially transform into
upside price extensions should the price level at point C coincide with the pre-
vious significant trough, that is, point A. Similarly, downside price projections
essentially transform into downside price extensions should the price level
at point C coincide with the previous significant peak, that is, point A. See
Figures 10.13 and 10.14.Figure 10.12 Downside Expansion beyond an Observed Price Range.