In the subsequent use of Fibonacci calculation will be used in determining a target. You always need to remember where our time trading “When in doubt, know when to get out,” Let’s start with an example in the condition in which the trend is creeping up. At the uptrend, the idea is to take advantage of the BUY at current prices which Fibonacci extension. You determine the Fibonacci extension levels by using three mouse clicks.
First, click on a significant Swing Low, then drag your cursor and click on the most recent Swing High. So in the end, pull back your cursor and click on one of the retracement levels. This will display each of the Price Extension levels indicating a good ratio and corresponding price levels.
Pretty neat, Now let us return to the example chart USD / CHF which I will show you the Fibonacci 50.0% rate on hold strong as the support and, after three tests, the currency pair finally resumed its uptrend.
In the table above, you can even see where the Swing High price increases passed earlier. And let’s use Fibonacci extensions to see which would be a good taking profit.
Pic. Fibonacci Extensions
Here are the results of what happened has happened retracement Swing Low:
- Price rallied up to the level of the level of 61.8%, which is engaged in the previous Swing High.
- Prices fell back to the level of 38.2%, where it found support.
- Price then found resistance at the level of 100%.
- A few days later, price rallied back before finding resistance at the level of 161.8%.
As you can see from these examples, where the rate of 61.8%, 100% and 161.8% is a good place to open a position to take advantage. Now, let’s look at an example where the use Fibonacci extension levels are declining trend in the movement.
This is what happened after the price reverses from Fibonacci retracement levels:
- Price found support at the 38.2% level.
- Rate of 50.0% as initial support.
- Rate of 61.8% is also an area of support, before prices fall to test the previous Swing Low.
- If you look ahead, you will find that the 100% extension also acts as a support.
After seeing what happened, then we can take advantage of the level, 38.2% to 50.0%, or 61.8%. All levels act as support, perhaps because other traders keep an eye on these levels for profit taking as well. Where the above example illustrates a movement of the prices found at least a few, while the support or resistance level, Fibonacci extensions are not always, but often enough to adjust your position to take advantage and manage risk you have.
You should use your discretion in using the Fibonacci extension tool. You have to judge how long the trend will continue. Then, it will teach you methods to assist you in determining the strength of a trend.