The three price tools: retracements, extensions, projections
Strip away the software and every Fibonacci price level comes from one of three measurements. Knowing which is which tells you what a level is actually claiming.
The comparison
| Tool | Data points | Where levels land | The question it answers |
|---|---|---|---|
| Retracement | 2 (a swing’s start and end) | Inside the swing | Where might this pullback end? |
| Extension | 2 (a swing’s start and end) | Beyond the swing | Where might the move beyond this swing stall? |
| Projection | 3 (swing A→B, projected from C) | Measured off a separate point | Where would this move equal a prior one? |
Retracements: inside the swing
Measure a completed swing and mark the fractions of it — .382, .50, .618, .786. For potential support you measure an upswing (low to high) and watch the pullback into those levels; for potential resistance, the mirror image. Details here.
Extensions: beyond the swing
Multiply the same swing by more than one — 1.272, 1.618, 2.618 — and project past its end. Extensions map where moves that break beyond a swing tend to pause, which makes them the natural target tool and a reference for tightening risk as a move matures.
Projections: comparing moves
The three-point tool. Measure one move (A to B), then project its length from a different starting point (C). At 100% this is symmetry — the search for equality between comparable moves, and the workhorse of pullback trading in trends.
Why the distinction matters
Because agreement between different tools is worth more than agreement within one. A zone built from a retracement plus a projection plus an extension rests on three genuinely independent measurements — three different swings and three different questions all pointing at one price. That is exactly what the confluence score counts, and why the derivation panel labels every calculation with its tool and source swing.