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Concept

Fibonacci Extensions

Project realistic trend continuation targets using measured expansion ratios — an institutional profit-taking framework.

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Key Takeaways

Projects price targets beyond the original impulse move.
Based on relationship between impulse move, retracement, and continuation leg.
Used to define logical profit-taking zones and trend continuation targets.
Not used as reversal predictions.
Provides framework for scaling out of winning positions into strength.

What It Measures

Projects price targets beyond the original impulse move.
Key levels are 127.
8%, 200%, and 261.
Based on relationship between impulse move, retracement, and continuation leg.

Institutional Use

Used to define logical profit-taking zones and trend continuation targets.
Not used as reversal predictions.
Provides framework for scaling out of winning positions into strength.

Key Signals

2% represents the first continuation objective.
8% is the most widely used institutional target.
200% and above signals strong momentum or breakout regime.
Extreme extensions beyond 261.
8% represent potential exhaustion zones.

Trading Playbook

Set profit targets at 127.
Scale out 50% at first target, trail remainder.
Reduce size at 200% and above as exhaustion risk increases.
Combine with structure and momentum confirmation to validate targets.

When Not to Trade

Do not use extensions as reversal entry signals.
Avoid in choppy non-trending environments where impulse moves lack clarity.