How to Use Fibonacci Extensions to Know When to Take Profit

Babypips Elementary - Grade 3

In an uptrend, where is it generally a good idea to take profits using Fibonacci?

At a Fibonacci price extension level.

How do you determine Fibonacci extension levels?

Click on a Swing Low, drag to the most recent Swing High, then drag down to any retracement level; the tool will display extension ratios with corresponding price levels.

In a downtrend, where is it generally a good idea to take profits using Fibonacci?

At a Fibonacci extension level since price often finds support there.

What is one problem when using Fibonacci extension levels for taking profit?

There is no way to know which exact Fibonacci extension level will provide support or resistance.

What is another problem when using Fibonacci extension levels?

Determining which Swing Low (or High) to start from when creating the extension levels.

Does any single Fibonacci extension level always act as support/resistance?

No; ANY of the levels may or may not act as support or resistance.

What is required to improve accuracy when picking Swing points for Fibonacci extensions?

Practice and discretion in judging how much longer the trend will continue.