Been using basic fibs for retracements but just started looking into extension levels for profit targets.
Still figuring out which levels actually matter in real trades. The 161.8 seems popular but wondering about the others.
Draw your extensions from major swing points, not every little pullback. That’s where most traders screw up and get useless levels. Watch how price reacts at each extension. If it smashes through 127.2 with solid momentum, 161.8’s your next target. If it’s struggling at 127.2, just take profits there. Don’t bother with extensions when the market’s chopping around sideways. They only work when there’s a strong trend happening. Save yourself the frustration and wait for clear directional moves before you even think about plotting these levels.
Start with 161.8 and 261.8. They hit most consistently when markets are trending. Use the swing high or low from your retracement as starting points, not the original trend points. Don’t rely just on extensions. Price usually stalls right before these levels, so watch for reversal signals around 150 to 165. Take some profits at 161.8 and let the rest run to 261.8. Skip weird levels like 138.2 or 423.6. They’re just noise.
The 161.8 level works great but it’s super dependent on market conditions. Strong trends blow right through it like it doesn’t exist.
What really helped me was combining extensions with old support/resistance zones. When my 161.8 lines up with a previous daily high, that’s when I pay attention.
I also watch how price hits these levels. If it rockets straight to 161.8 without pausing, I let it run to 261.8. If it struggles getting there, I take profits early.
One thing nobody mentioned - timeframe matters big time. Extensions work way better on 4H and daily charts. On 15-minute charts they’re basically useless.
161.8 is important, but I also keep an eye on 127.2 and 200, depending on the timeframe.
I always draw extensions from the full swing move instead of just the pullback. This gives clearer reversal levels.
Make sure to test these on your charts first before risking actual money.
161.8 and 127.2 work best for me. Sometimes 200 level hits too but less reliable.
Look for confluence around round numbers. 161.8 near 1.2000 gets hit way more than random levels.
Just use 161.8 and 261.8 forget the rest.