I have been experimenting with fib extension levels, as opposed to the fib retracement levels for my entries.
Of course all trades need to be combined with higher time frame analysis, which will be shown below. However, I have found that the 127.2 number and especially the 161.8 extension number to be a great place for a trade entry, if you are certain about the Fibonacci range and retracement level; which can be quite easy to find once the move has happened. This is a nice system of taking trades I believe, because occasionally one may misinterpret the actual retracment level, and enter at the incorrect price, as one may have drawn their fib level incorrectly, relative to other traders; whereas trading the extension allows one more time to analyze, as well as the gift of hindsight. Furthermore, if we are aware that traders take profit at these extension levels, then would one not want believe that this area is significant? and would one then not consider entering a trade at this point? since so many traders are exiting, the volatility is high, and usually your risk to reward ratios are very high as well. This is a trade I took earlier today, I have exited half my position, the remainder I am going to let run, but this trade allowed me a great reward to risk ratio, whereby i risked 4 pips, in order to make 40 (which is target 1). ie; a 1/10 reward to risk ratio.
But please do take into account that i used this method for my entry, after having done my higher frame analysis.
This is just something I have been experimenting with, and im sure many other traders are aware of it; nonetheless, if you were not aware of it, it is great food for thought 🙂