The Fibonacci Retracement tool is something that you will utilize in your analysis every day. It’s used for planning entries, stops and even targets. What the retracement tool actually does, is assisting us to measure the potential pullback within a run. Fibonacci (also known as the golden ratio) is a sequence that shows up over and over again in nature, within our human bodies, and even in the financial markets. The Trading MasterClass strategies are heavily based around Fibonacci, so you will see this term come up over and over again as we progress through the lessons.
The Fibonacci Extension tool is utilized to measure the actual run within a trending market (as opposed to the retracement tool, which measures the pullback). In this lesson, you’ll learn how to set up Fibonacci Extension and see examples as to how to apply the tool to your charts.