Many know Fibonacci retracements for entries, but did you know you can also use the sequence to define effective exits?
I'll explain how to take advantage of Fibonacci extensions to take profits strategically.
What is the Fibonacci Extension?
It is a tool that projects levels beyond the last price impulse, ideal for marking targets (TP).
How is it used?
1. Identify the start and end of the impulse.
2. Mark the pullback.
3. The tool will give you levels like:
1.272 → first conservative target
1.618 → 'ideal' target
2.0 and 2.618 → for strong trends
Simple example:
Increase from $100 to $150
Retracement to $125
Extension 1.618 ≈ $176.50 (typical target)
Tips for successful exits:
Use staggered take-profits (for example: 50% at 1.618, the rest at 2.0).
Never set the TP exactly at the key number.
Better $176.20 instead of $176.50 to avoid missing out by a few cents.
