Fibonacci Retracements & Extensions are areas of support and resistance that the market has an uncanny ability to respect. We can use retracements to gauge where the market will pull back to and use extensions to find where the market will extend to. The market has a much higher likelihood of respecting an area if it is coupled with other areas of support or resistance; reversal pattern, extension, and resistance area.
We draw the extensions the same way that we draw the retracements. We look for the beginning of the run followed by the pivot and retracement point. You can find the extensions by clicking F9 on your 610 chart in NT and then click on A, followed by B, and finally C.
We use the extensions to find where the market can extend to or where the market will go. Notice in the chart below how the market slowed down or respected the areas. We can use this in combination with other areas to identify where the market is going.
The more areas you have, the more likely the market will either pivot from that point or consolidate and turn. You could have a consolidation, supp/res area, trendline, and an extension all in one area. The more areas the more likely the market will slow or turn.