What is the difference between Fibonacci retracement and extension?

A retracement measures how far price pulled back inside a previous swing (23.6%, 38.2%, 50%, 61.8%, 78.6%) — used for Wave 2 and Wave 4 entries. An extension projects price beyond the swing (127.2%, 161.8%, 261.8%) — used for Wave 3 and Wave 5 targets.

Retracements and extensions are two different Fibonacci-based measurement techniques used together in Elliott Wave. Retracements quantify how deeply a corrective move pulls back relative to the prior impulse — they're always between 0% (no retracement) and 100% (full retracement). The standard retracement levels are 23.6%, 38.2%, 50%, 61.8%, and 78.6%. Used for: Wave 2 retracement of Wave 1, Wave 4 retracement of Wave 3, Wave B retracement of Wave A. Extensions project where price will travel beyond a previous high or low — they're always above 100% (typically 127.2%, 161.8%, 261.8%, or 423.6%). Used for: Wave 3 extension targets, Wave 5 extension targets, Wave C extension of Wave A. Every complete Elliott Wave analysis uses both — retracements to project corrective lows, extensions to project impulsive targets.

• → Elliott Wave Theory Guide — the 5-3 pattern, rules, Fibonacci, wave degrees
• → How to Count Elliott Waves — 6-step process used on 108 instruments
• → Elliott Wave Fibonacci Guide — the 7 core ratios and how they're applied
• → Rules and Guidelines — the 3 absolute rules + 7 guidelines

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Weekly wave counts on 108 US instruments

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