If retracements tell you where a pullback might end, extensions tell you where the next leg might go. Extensions project levels beyond 100% of a move, giving objective targets for taking profit once the trend resumes. They turn a vague 'ride the trend' plan into specific price zones.
The key extension ratios
The two most watched extensions are 127.2% (the square root of 1.618) and 161.8% (the golden ratio itself). Beyond those, 200% and 261.8% are used for very extended moves. These levels are drawn from the same swing structure used for retracements, so a single set of anchors can give you both entry and target.
How to use extensions
A common workflow is to enter on a retracement, then set partial targets at the 127.2% and 161.8% extensions of the prior impulse. Because trends often stall or reverse at these projections, they are natural places to bank profit, tighten a stop, or scale out rather than gambling on an open-ended move.
- 127.2% — the first, most conservative extension target.
- 161.8% — the classic 'measured move' target.
- 200% / 261.8% — stretch targets for powerful trends.
- Extensions are targets, not signals — confirm with structure.
Extensions project realistic targets beyond 100% — 127.2% and 161.8% are the standard levels for scaling out of a winning trend.