Using Fibonacci Extensions to Estimate the Range

[Soultrader 12]

Heres a simple method that you can use to anticipate the trading range based on the previous days range. We use only Fibonacci numbers of 1.27 and 1.618.

 

First we identify the previous days range. In this example lets take the S&P 500 emini:

 

High: 1294

Low: 1281.50

Range: 12.5

 

Second, we take the

(Range x 1.27) + Previous Day Low

(12.5 x 1.27) + 1281.50 = 1297.375

 

This is our first estimated high.

 

To get the low:

High - (Range x 1.27)

1294 - (12.5 x 1.27) = 1278.125

 

This is our first estimated low.

 

Third: We use the same exact formula but replace 1.27 with 1.618.

 

High:

(Range x 1.618) + Previous Day Low

(12.5 x 1.618) + 1281.50 = 1301.725

 

This is our second estimated high.

 

Low:

High - (Range x 1.618)

1294 - (12.5 x 1.618) = 1273.775

 

This is our second estimated low.

 

Now we get two estimated ranges: 1297.375 - 1278.125 & 1301.725 - 1273.775.

 

Hope you find this useful.