One of the most underrated skills in trading isn’t spotting a great entry—it’s knowing when and where to take your profits. That’s where Fibonacci extensions come in handy.
These levels help forecast potential price targets after a retracement, giving you a calculated and strategic exit plan. Let’s break it all down in simple terms, with real examples for both uptrends and downtrends.
Fibonacci extensions are predictive levels drawn beyond the standard retracement points. These extensions help traders estimate how far a price might travel after a pullback and continuation of a trend.
They’re built using three points:
Once plotted, the chart will display key extension ratios like 61.8%, 100%, and 161.8%. These serve as potential take-profit zones.
Let’s take an example from USD/CHF.
From there, the pair resumed its uptrend. Using the Fibonacci extension tool, we get the following target levels:
Each level proved valuable for taking partial or full profits. Had you exited around these levels, you could’ve maximized returns while minimizing risk.
Now let’s flip the script and apply Fibonacci extensions to a downtrend.
Take EUR/USD on a 1-hour chart:
After this, the market resumed its downtrend. Using the extension tool gave us logical target levels:
As expected, these levels provided temporary support where you could have exited positions profitably.
Fibonacci extensions give you clarity and structure when planning exit points. While they aren’t always exact, they’re powerful when paired with price action or technical confluence.
🔑 Pro tip: Don’t rely on them in isolation. Always validate extension levels with trend momentum, candlestick confirmation, or volume changes.
Next time you enter a trade, don’t just focus on when to get in—plan your way out using Fibonacci extensions.
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