Constructing ABC Fibonacci expansion objectives

Three profit objectives from an ABC swing

A Fibonacci expansion constructs a profit-objective price by scaling the completed AB range with a selected Fibonacci ratio and adding that length to the C extreme. This construction uses only the three ratios 0.618, 1.0, and 1.618 to compute those prices.

An ABC correction is a three-point labeling of a thrust and its immediate pullback: A starts the impulse, B is the impulse extreme, and C is the opposite extreme of the following correction. After A, B, and C are marked on a bar chart, their prices are entered into the three expansion equations to produce three profit objectives at different distances from C.

Three logical profit objectives can be computed from any ABC swing, whether the thrust is up or down, using intraday highs and lows.

How to mark A, B, and C

On an advance, A starts the upswing, B is that swing's highest high, and C is the lowest low after B. On a decline, A starts the downswing, B is the lowest low, and C is the highest high after B.

The three expansion prices

Fibonacci projection is a forward measurement of the AB range from the C origin, so the 1.0 case reproduces an equal swing and neighboring Fibonacci ratios produce contracted and expanded counterparts.

The contracted objective point equals 0.618 multiplied by the B-minus-A range, then added to C. It is the nearer expansion target.

The objective point equals the B-minus-A range added to C, which is the 1.0 expansion case.

The expanded objective point equals 1.618 multiplied by the B-minus-A range, then added to C. It is the farther expansion target.

The three resulting prices are extended from C in the same direction as swing AB. The construction does not use time to place objectives and does not accept negative numbers as valid expansion results.

Using the prices as exits

Objective points are used primarily to exit positions already aligned with the AB trend, not as standalone entries against that trend.

Choosing among the contracted, equal, and expanded objectives is a judgment that can incorporate other technical context such as oscillators, thrust, higher-timeframe trend, and volatility.