Chapter 9 FIBONACCI LEVELS FOR TAKE PROFITS – FIBONACCI EXTENSIONS
Finally, you can also use Fibonaccis for your take profit orders. Especially the Fibonacci extensions are ideal to determine take profit levels in a trend. The most commonly used Fibonacci extension levels are 138.2 and 161.8.
Most trading platforms allow you to add custom levels. Usually, the parameters to add the Fibonacci extensions are:
-0.618 for the 161.8 Fibonacci extension
-0.382 for the 138.2 Fibonacci extension
The rules for take profit orders are very individual, but most traders use it as follows:
A 50, 61.8 or 78.6 retracement will often go to the 161 Fibonacci extension after breaking through the 0%-level. A 38.2 retracement will often come to a halt at the 138 Fibonacci extension. The screenshots below show the Fibonacci moves from the beginning and this time we applied the extensions to the price moves. As you can see, the extensions provided great places for take profit orders.
In my strategy, I use the Fibonacci extensions to find trends that have completed an ABCD pattern and are likely to reverse. The Fib extension can be of great help here.
