what do fibonacci extensions tell you 
fibonacci extensions are a way to establish price targets or find projected areas of support or resistance when the price is moving into an area where other methods of finding support or resistance are not applicable or evident if the price moves through one extension level it may continue moving toward the next that said fibonacci extensions are areas of possible interest the price may not stop or reverse right at the level but the area around it may be important for example the price may move just past the 1 618 level or pull up just shy of it before changing directions if a trader is long on a stock and a new high occurs the trader can use the fibonacci extension levels for an idea of where the stock may go the same is true for a trader who is short fibonacci extension levels can be calculated to give the trader ideas on profit target placement the trader then has the option to decide whether to cover the position at that level fibonacci extensions can be used for any timeframe or in any market typically clusters of fibonacci levels indicate a price area that will be significant for the stock and also for traders in their decision making since extension levels can be drawn on different price waves over time when multiple levels from these different waves converge at one price that could be a very important area the difference between fibonacci extensions and fibonacci retracementswhile extensions show where the price will go following a retracement fibonacci retracement levels indicate how deep a retracement could be in other words fibonacci retracements measure the pullbacks within a trend while fibonacci extensions measure the impulse waves in the direction of the trend limitations of using fibonacci extensionsfibonacci extensions are not meant to be the sole determinant of whether to buy or sell a stock investors should use extensions along with other indicators or patterns when looking to determine one or multiple price targets candlestick patterns and price action are especially informative when trying to determine whether a stock is likely to reverse at the target price there is no assurance price will reach or reverse at a given extension level even if it does it is not evident before a trade is taken which fibonacci extension level will be important the price could move through many of the levels with ease or not reach any of them 