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The Fibonacci extension gives an idea where to put your limit stop and cash the profits.
When price bounce from on the Fibonacci retracement level and pass the proves peak or low you need to know where will be next resistance.
Calculating Fibonacci extensions work best when price is at new highs or new lows – where there aren’t any obvious support or resistance levels on the chart.
To build Fibonacci Extension you First, click on a significant Swing Low, then drag your cursor and click on the most recent Swing High. Finally, drag your cursor back down and click on any of the retracement levels.
The examples illustrate that price finds at least some temporary support or resistance at the Fibonacci extension.